What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 440 added, 541 removed, 884 unchanged (53% of the section changed)

3 unchanged sentences

(dollars in thousands, except share and per share data)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and due from banks $ 12,516 $ 11,882

1 unchanged sentence

Interest-bearing deposits with banks and other short-term investments

661,173 619,017

Investment securities available-for-sale (amortized cost of $ 1,330,077 and $ 1,408,935 , respectively, and allowance for credit losses of $ 0 and $ 22 , respectively)

3 unchanged sentences

Federal Reserve and Federal Home Loan Bank stock 51,467 51,763

Loans held for sale 15,251 —

Loans held for investment, at amortized cost

7,943,306 7,934,888

Allowance for credit losses

( 129,469 ) ( 114,390 )

Loans held for investment, net of allowance

7,813,837 7,820,498

Premises and equipment, net 7,079 7,694

2 unchanged sentences

Bank-owned life insurance

320,055 115,806

Goodwill and other intangible assets, net

4 unchanged sentences

Noninterest-bearing demand

$ 1,607,826 $ 1,544,403

Interest-bearing transaction

926,722 1,211,791

Savings and money market 3,558,919 3,599,221

Time 2,710,908 2,217,467

Time deposits 3,183,801 2,775,663

Total deposits 9,277,268 9,131,078

1 unchanged sentence

Other short-term borrowings

490,000 490,000

Long-term borrowings

76,181 76,108

Operating lease liabilities 38,484 23,815

6 unchanged sentences

Additional paid-in capital

386,535 384,932

Retained earnings 978,995 982,304

Accumulated other comprehensive loss ( 124,177 ) ( 162,357 )

Accumulated other comprehensive income (loss)

( 120,939 ) ( 141,473 )

Total Shareholders’ Equity 1,244,891 1,226,061

1 unchanged sentence

See Notes to Consolidated Financial Statements.

T able of Contents

EAGLE BANCORP, INC.

1 unchanged sentence

(dollars in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Interest Income

11 unchanged sentences

Net Interest Income 65,649 74,698

Provision for Credit Losses 10,094 5,644 54,228 17,046

(Reversal of) Provision for Credit Losses for Unfunded Commitments ( 1,593 ) ( 839 ) ( 529 ) 327

Net Interest Income After (Reversal of) Provision for Credit Losses 63,342 65,914 164,195 200,181

Provision for (Reversal of) Credit Losses 26,255 35,175

Provision for (Reversal of) Credit Losses for Unfunded Commitments

Net Interest Income After Provision for (Reversal of) Credit Losses 39,691 39,067

Noninterest Income

Service charges on deposits 1,743 1,699

Gain (loss) on sale of loans 20 ( 5 ) 57 395

Net gain (loss) on sale of investment securities

9 unchanged sentences

FDIC insurance 8,962 6,412

Goodwill impairment

— — 104,168 —

Other expenses 2,847 2,141

7 unchanged sentences

See Notes to Consolidated Financial Statements.

T able of Contents

EAGLE BANCORP, INC.

1 unchanged sentence

(dollars in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net Income (Loss)

$ 1,675 $ ( 338 )

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on securities available-for-sale 19,351 ( 5,067 )

Reclassification adjustment for (gain) loss included in net income (loss) ( 2 ) ( 4 ) ( 8 ) 10

Reclassification adjustment for net (gains) losses included in net income (loss)

Total unrealized gain (loss) on investment securities available-for-sale

19,348 ( 5,070 )

Amortization of unrealized loss on securities transferred to held-to-maturity 1,204 1,385

Total unrealized gain on investment securities held-to-maturity 1,355 1,400 4,062 3,444

Unrealized (loss) gain on derivatives ( 25 ) — 225 —

Total unrealized (loss) gain on derivatives ( 25 ) — 225 —

Unrealized gain (loss) on derivatives ( 18 ) 274

Other comprehensive income (loss) 20,534 ( 3,411 )

1 unchanged sentence

See Notes to Consolidated Financial Statements.

T able of Contents

EAGLE BANCORP, INC.

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

Three Months Ended September 30, 2024 and 2023

(dollars in thousands except share and per share data)

Accumulated Other Comprehensive Income (Loss)

Common Additional Paid-in Capital Retained Earnings Shareholders' Equity

(dollars in thousands, except share data)

Common Additional Paid-in Capital

Earnings Accumulated

Comprehensive

Income (Loss) Total

Shareholders’

Shares Amount

Balance July 1, 2024 30,180,482 $ 297 $ 380,142 $ 949,863 $ ( 160,843 ) $ 1,169,459

Balance as of January 1, 2025

30,202,003 $ 298 $ 384,932 $ 982,304 $ ( 141,473 ) $ 1,226,061

Net Income — — — 1,675 — 1,675

Other comprehensive income, net of tax

Stock-based compensation expense — — 2,019 — — 2,019

Forfeitures of time-based stock awards and shares withheld for payroll taxes

— — — — 20,534 20,534

Time-based stock awards granted 10,082 — — — — —

Stock-based compensation expense — — 1,524 — — 1,524

Issuance of common stock under share-based compensation arrangements 163,236 2 ( 2 ) — — —

Issuance of common stock related to employee stock purchase plan 3,604 — 81 — — 81

1 unchanged sentence

— — — ( 4,984 ) — ( 4,984 )

Balance September 30, 2024 30,173,200 $ 298 $ 382,284 $ 967,019 $ ( 124,177 ) $ 1,225,424

Balance July 1, 2023 29,912,082 $ 296 $ 370,278 $ 1,040,779 $ ( 191,587 ) $ 1,219,766

Net Income — — — 27,383 — 27,383

Other comprehensive loss, net of tax — — — — ( 19,918 ) ( 19,918 )

Stock-based compensation expense — — 1,969 — — 1,969

Forfeitures of time-based stock awards and shares withheld for payroll taxes

Balance as of March 31, 2025

30,368,843 $ 300 $ 386,535 $ 978,995 $ ( 120,939 ) $ 1,244,891

Time-based stock awards granted 14,280 — — — — —

Issuance of common stock related to employee stock purchase plan 6,870 — 145 — — 145

Cash dividends declared ($ 0.45 per share)

Balance as of January 1, 2024

29,925,612 $ 296 $ 374,888 $ 1,061,456 $ ( 162,357 ) $ 1,274,283

Common stock repurchased — — 2 — — 2

Balance September 30, 2023 29,917,982 $ 296 $ 372,394 $ 1,054,699 $ ( 211,505 ) $ 1,215,884

See Notes to Consolidated Financial Statements.

EAGLE BANCORP, INC.

Consolidated Statements of Changes in Shareholders' Equity - Continued (Unaudited)

Nine Months Ended September 30, 2024 and 2023

(dollars in thousands except share and per share data)

Accumulated Other Comprehensive Income (Loss)

Common Additional Paid-in Capital Retained Earnings Shareholders' Equity

Shares Amount

Balance January 1, 2024 29,925,612 $ 296 $ 374,888 $ 1,061,456 $ ( 162,357 ) $ 1,274,283

Net Loss — — — ( 62,325 ) — ( 62,325 )

Other comprehensive income, net of tax — — — — 38,180 38,180

Stock-based compensation expense — — 7,051 — — 7,051

Forfeitures of time-based stock awards and shares withheld for payroll taxes ( 66,845 ) 2 ( 2 ) — — —

Vesting of performance-based stock awards, net of shares withheld for payroll taxes 12,013 — — — — —

Time-based stock awards granted 285,978 — — — — —

Issuance of common stock related to employee stock purchase plan 16,442 — 347 — — 347

Cash dividends declared ($ 1.065 per share)

— — — ( 338 ) — ( 338 )

Balance September 30, 2024 30,173,200 $ 298 $ 382,284 $ 967,019 $ ( 124,177 ) $ 1,225,424

Balance January 1, 2023 31,346,903 $ 310 $ 412,303 $ 1,015,215 $ ( 199,507 ) $ 1,228,321

Net Income — — — 80,309 — 80,309

Other comprehensive loss, net of tax

— — — — ( 3,411 ) ( 3,411 )

Stock-based compensation expense — — 2,368 — — 2,368

Forfeitures of time-based stock awards and shares withheld for payroll taxes ( 59,314 ) 1 ( 1 ) — — —

Vesting of performance-based stock awards, net of shares withheld for payroll taxes 27,296 — — — — —

Time-based stock awards granted 187,822 — — — — —

Issuance of common stock under share-based compensation arrangements 256,360 1 ( 1 ) — — —

Issuance of common stock related to employee stock purchase plan 3,760 — 79 — — 79

1 unchanged sentence

— — — ( 13,568 ) — ( 13,568 )

Common stock repurchased ( 1,600,000 ) ( 15 ) ( 48,020 ) — — ( 48,035 )

Balance September 30, 2023 29,917,982 $ 296 $ 372,394 $ 1,054,699 $ ( 211,505 ) $ 1,215,884

Balance as of March 31, 2024

30,185,732 $ 297 $ 377,334 $ 1,047,550 $ ( 165,768 ) $ 1,259,413

See Notes to Consolidated Financial Statements.

T able of Contents

EAGLE BANCORP, INC.

1 unchanged sentence

(dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flows From Operating Activities:

Net (Loss) Income $ ( 62,325 ) $ 80,309

Adjustments to reconcile Net (Loss) Income to net cash provided by operating activities:

Net Income (loss) $ 1,675 $ ( 338 )

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses 26,255 35,175

(Reversal of) provision for unfunded commitments ( 297 ) 456

Goodwill impairment

Depreciation and amortization 826 786

Gain on sale of loans ( 57 ) ( 395 )

(Gain) loss on mortgage servicing rights ( 1,512 ) 108

Securities premium amortization, net 4,178 4,766

Origination of loans held for sale — ( 29,690 )

Proceeds from sale of loans held for sale — 36,819

Loss on mortgage servicing rights — 34

Securities premium amortization (discount accretion), net 1,155 1,432

Net gain on sale of other real estate owned ( 487 ) —

(Gain) loss on call/sale of investment securities ( 10 ) 14

Net increase in cash surrender value of BOLI ( 2,143 ) ( 1,972 )

Net increase in cash surrender value of bank owned life insurance ( 4,282 ) ( 703 )

Net (gain) loss on sale of investment securities ( 4 ) ( 4 )

Stock-based compensation expense 1,524 2,368

Decrease (increase) in other assets 7,262 ( 696 )

Increase in other liabilities 2,528 51,058

Increase (decrease) in other liabilities 9,558 ( 35,664 )

Net cash provided by operating activities 43,185 2,846

Cash Flows From Investing Activities:

Investment securities available-for-sale:

Proceeds from maturities 89,035 92,647

Proceeds from call/sale 27,000 8,303

Investment securities held-to-maturity:

Proceeds from maturities 53,187 60,312

Proceeds from call 4,644 2,906

Proceeds from (purchase of) Federal Reserve stock ( 222 ) 39,378

Purchase of Federal Home Loan Bank stock ( 11,758 ) —

Proceeds from sale of mortgage servicing rights 4,798 —

Net increase in loans ( 32,828 ) ( 287,673 )

Redemption of BOLI — 736

Proceeds from sale of OREO 656 609

Net change in premises and equipment ( 183 ) ( 298 )

Net Cash Provided by (Used in) Investing Activities 134,329 ( 83,080 )

Proceeds from maturities of available-for-sale securities 28,273 26,883

Proceeds from sale/call of available-for-sale securities 50,000 27,000

Proceeds from maturities of held to maturity securities 15,148 16,027

Proceeds from call of held-to-maturity securities 52 52

Purchases of Federal Reserve stock ( 75 ) ( 71 )

Proceeds from (purchases of) of Federal Home Loan Bank stock 372 ( 28,859 )

Net change in loans ( 34,899 ) ( 35,758 )

(Purchase) redemption of bank owned life insurance ( 200,000 ) —

Proceeds from sale of other real estate owned 772 656

Purchase of premises and equipment ( 138 ) ( 71 )

Net cash (used in) provided by investing activities ( 140,495 ) 5,859

Cash Flows From Financing Activities:

Decrease in deposits ( 267,189 ) ( 336,876 )

Increase (decrease) in customer repurchase agreements 1,453 ( 9,411 )

Net (decrease) increase in short-term borrowings ( 130,000 ) 325,000

Net proceeds from long-term borrowings 75,812 —

Increase (decrease) in deposits 146,190 ( 306,600 )

(Decrease) increase in customer repurchase agreements ( 800 ) 6,472

Increase in short-term borrowings — 300,000

Proceeds from employee stock purchase plan 81 79

Common stock repurchased — ( 48,035 )

Cash dividends paid ( 4,984 ) ( 13,468 )

Net Cash Used in Financing Activities ( 360,211 ) ( 109,688 )

Net Decrease in Cash and Cash Equivalents ( 112,200 ) ( 53,799 )

Net cash provided by (used in) financing activities 140,487 ( 13,517 )

Net Increase (Decrease) in Cash and Cash Equivalents 43,177 ( 4,812 )

Cash and Cash Equivalents at Beginning of Period 633,480 722,684

Cash and Cash Equivalents at End of Period $ 676,657 $ 717,872

See Notes to Consolidated Financial Statements.

EAGLE BANCORP, INC.

Consolidated Statements of Cash Flows - Continued (Unaudited)

(dollars in thousands)

Nine Months Ended September 30,

Supplemental Cash Flows Information:

Interest paid $ 88,838 $ 66,800

Income taxes paid $ 5,980 $ 16,940

Non-Cash Investing Activities:

Transfer of loans for investment to loans held for sale $ 5,000 $ —

Supplemental Non-Cash Disclosures:

Initial recognition of operating lease right-of-use assets $ 15,838 $ —

Transfer of loans held for investment to loans held for sale 15,251 —

Transfers from loans to other real estate owned — 400

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of Significant Accounting Policies

Note 1 – Summary of Significant Accounting Policies

Nature of Operations

Eagle Bancorp, Inc.

(the "Parent") and its subsidiaries (together with the Parent, the “Company”), through EagleBank (the “Bank”), conduct a full service community banking business, primarily in Northern Virginia, Suburban Maryland and Washington, D.C.

The primary financial services offered by the Bank include real estate, commercial and consumer lending, as well as traditional deposit services.

The Bank is also active in the origination of small business loans.

The guaranteed portion of small business loans, guaranteed by the Small Business Administration ("SBA"), is typically sold to third party investors in a transaction apart from the loan’s origination.

The Bank offers its products and services through twelve banking offices, four lending centers and various digital capabilities, including PC and smartphone-enabled banking services.

Landroval Municipal Finance, Inc., a subsidiary of the Bank, focuses on lending to municipalities by buying debt on the public market as well as direct purchase issuance.

Principles of Consolidation and Basis of Presentation

4 unchanged sentences

The Consolidated Financial Statements and accompanying notes of the Company included herein are unaudited.

The Consolidated Balance Sheet as of December 31, 2023 was derived from the audited Consolidated Balance Sheet as of that date.

The Consolidated Financial Statements reflect all adjustments, consisting of normal recurring adjustments, that in the opinion of management are necessary to present fairly the results for the periods presented.

4 unchanged sentences

These statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Nature of Operations

The Company, through the Bank, conducts a full-service community banking business, primarily in Northern Virginia, Suburban Maryland, and Washington, D.C.

The primary financial services offered by the Bank include real estate, commercial and consumer lending, as well as traditional deposit and repurchase agreement products.

The Bank is also active in the origination of small business loans.

The guaranteed portion of small business loans, guaranteed by the Small Business Administration ("SBA"), is typically sold to third party investors in a transaction apart from the loan's origination.

The Bank offers its products and services through twelve banking offices, four lending centers and various digital capabilities, including remote deposit services and mobile banking services.

Eagle Insurance Services, LLC, a subsidiary of the Bank that previously offered access to insurance products and services through a referral program with a third party insurance broker, continues to receive fee income in connection with such program.

Landroval Municipal Finance, Inc., a subsidiary of the Bank, focuses on lending to municipalities by buying debt on the public market as well as direct purchase issuance.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes.

Actual results could differ from those estimates and such differences could be material to the consolidated financial statements.

Actual results may differ from those estimates and such differences could be material to the consolidated financial statements.

The allowance for credit losses ("ACL") is a material estimate that is particularly susceptible to significant variance in the near-term.

Investment Securities

6 unchanged sentences

Realized gains and losses, using the specific identification method, are included as a separate component of noninterest income in the Consolidated Statements of Operations.

Premiums and discounts on investment securities are amortized or accreted to the earlier of call or maturity based on expected lives, which include prepayment adjustments and call optionality.

Premiums and discounts on investment securities are amortized/accreted to the earlier of call or maturity based on expected lives, which lives are adjusted based on prepayment assumptions and call optionality.

Transfers of Investment Securities from Available-for-Sale to Held-to-Maturity

Transfers of debt securities into the HTM category from the AFS category are made at amortized cost, net of unrealized gain or loss reported in accumulated other comprehensive income (loss) at the date of transfer.

The unrealized holding gain or loss at the date of transfer is retained in other comprehensive income and in the carrying value of the HTM securities.

The unrealized holding gain or loss at the date of transfer is retained in other comprehensive income (loss) and in the carrying value of the HTM securities.

Such amounts are amortized over the remaining life of the security.

The Company does not intend to sell the HTM investments, and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be at maturity.

The Company classifies loans in its portfolio as either held for investment (“HFI”) or held for sale (“HFS”).

The Company classifies loans in its portfolio as either held for investment (“HFI”), when management has the intent and ability to hold the loans for the foreseeable future or until maturity or payoff, or held for sale (“HFS”).

HFS loans are reported at the lower of cost or fair value on the Consolidated Balance Sheets.

1 unchanged sentence

Interest income on loans is recognized at the contractual rate on the principal amounts outstanding.

It is the Company’s policy to discontinue the accrual of interest when circumstances indicate that collection is doubtful.

Loan origination fees, net of direct loan origination costs, and commitment fees are deferred and amortized on the interest method over the term of the loan.

Past due loans are placed on nonaccrual status when there is a clear indication that the borrower's cash flow may not be sufficient to meet payments as they become due.

Generally, this conclusion is reached when a loan is 90 days past due.

Past due loans are placed on nonaccrual status when the contractual payment of principal or interest has become 90 days past due or there is a clear indication that the borrower's cash flow may not be sufficient to meet payments as they become due, even when the loan is currently performing.

A loan may remain on accrual status if it is in the process of collection and is well secured.

When a loan is placed on nonaccrual status, all previously accrued and unpaid interest is reversed through interest income.

3 unchanged sentences

Allowance for Credit Losses

The following table presents a breakdown of the provision for credit losses included in our Consolidated Statements of Operations for the applicable periods:

Three Months Ended September 30, Nine Months Ended September 30,

The following table presents a breakdown of the current provision for credit losses included in our Consolidated Statements of Operations for the applicable periods:

Three Months Ended March 31,

(dollars in thousands) 2025

Provision for credit losses - loans $ 10,869 $ 5,643 $ 54,947 $ 15,802

Provision for (reversal of) credit losses - loans

$ 26,309 $ 35,174

Provision for (reversal of) credit losses - HTM debt securities

Provision for credit losses - AFS debt securities — — — —

Total $ 10,094 $ 5,644 $ 54,228 $ 17,046

Total Provision for credit losses

$ 26,255 $ 35,175

Allowance for Credit Losses - Loans

The allowance for credit losses ("ACL") - loans is an estimate of the expected credit losses in the HFI loans portfolio.

The Company's ACL on the loan portfolio is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.

The ACL - Loans is an estimate of the expected credit losses in the HFI loans portfolio.

The Company's ACL on its loan portfolio is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.

Loans, or portions thereof, are charged off against the allowance when they are deemed uncollectible.

Expected recoveries are recorded to the extent they do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

The ACL - Loans is measured on a collective pool basis when similar risk characteristics are present.

Reserves on loans that do not share similar risk characteristics are evaluated on an individual basis.

Nonaccrual loans are specifically reviewed for loss potential and when deemed appropriate are assigned a reserve based on an individual evaluation.

The remainder of the portfolio, representing all loans not evaluated individually for impairment, is segregated by call report codes, and a loan-level probability of default ("PD") / loss given default ("LGD") cash flow method is applied using an exposure at default ("EAD") model.

The remainder of the portfolio, representing all loans not evaluated individually for impairment, is pooled into portfolio segments by call report codes and a loan-level probability of default (“PD”) / Loss Given Default (“LGD”) cash flow method is applied using an exposure at default (“EAD”) model.

These historical loss rates are then modified to incorporate our reasonable and supportable forecast of future losses at the portfolio segment level, as well as any necessary qualitative adjustments.

The Company uses regression analysis of historical internal and peer data provided by a third-party service provider (as Company loss data is insufficient) to determine suitable credit loss drivers to utilize when modeling lifetime PD and LGD.

The Company uses regression analysis of historical internal and peer data provided by a third-party provider (as Company loss data is insufficient) to determine suitable credit loss drivers to utilize when modeling lifetime PD and LGD.

This analysis also determines how expected PD will be impacted by different forecasted levels of the loss drivers.

1 unchanged sentence

For periods beyond which we are able to develop reasonable and supportable forecasts, we revert to the historical loss rate on a straight-line basis over a twelve-month period.

For each of the loan segments listed below, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speeds, PD rates and LGD rates.

The modeling of expected prepayment speeds is based on historical internal data.

EAD is based on each instrument's underlying amortization schedule in order to estimate the bank's expected credit loss exposure at the time of the borrower's potential default.

Portfolio segments are used to pool loans with similar risk characteristics and align with our methodology for measuring current expected credit losses ("CECL").

14 unchanged sentences

Construction – commercial and residential .

The construction commercial and residential loan portfolio comprises loans made to builders and developers of commercial and residential property, for both renovation, new construction, and development projects.

The construction commercial and residential loan portfolio comprises loans made to builders and developers of commercial and residential property, for renovation, new construction and development projects.

Collateral properties include apartment buildings, mixed use property, residential condominiums, single and 1-4 residential property and office buildings.

8 unchanged sentences

Other Consumer .

The other consumer portfolio comprises consumer purpose loans not secured by real property, including personal lines of credit and loans, overdraft lines, and vehicle loans.

The other consumer portfolio comprises consumer loans not secured by real property, including personal lines of credit and loans, overdraft lines and vehicle loans.

This category also includes other loan items such as overdrawn deposit accounts as well as loans and loan payments in process.

For each of these loan segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speeds, PD rates, and LGD rates.

The modeling of expected prepayment speeds is based on historical internal data.

EAD is based on each instrument's underlying amortization schedule in order to estimate the bank's expected credit loss exposure at the time of the borrower's potential default.

The ACL also includes an amount for inherent risks not reflected in the historical quantitative analysis associated with the reasonable and supportable forecast.

Relevant factors include, but are not limited to, concentrations of credit risk, changes in underwriting standards, experience and depth of lending staff and trends in delinquencies.

The ACL also includes a qualitative adjustment for inherent risks not reflected in the historical quantitative analysis associated with the reasonable and supportable forecast.

Relevant factors include, but are not limited to, concentrations of credit risk, appraisal risk from volatility in the market, changes in underwriting standards, experience and depth of lending staff and trends in delinquencies.

While our methodology in establishing the reserve for credit losses attributes portions of the ACL and RUC to the commercial and consumer portfolio segments, the entire ACL and RUC is available to absorb credit losses expected in the total loan portfolio and total amount of unfunded credit commitments, respectively.

Our model may reflect assumptions by management that are not covered by the qualitative and environmental factors, and we reevaluate all of its factors quarterly.

During the first quarter of 2024, management enhanced the cash flow model to incorporate three macroeconomic variables in addition to national unemployment.

The four economic variables selected, national unemployment, which was the original variable used, Commercial Real Estate ("CRE") Price Index, House Price Index and Gross Domestic Product ("GDP"), are incorporated by utilizing a Loss Driver Analysis approach that factors in historical losses, including during the Great Recession, of regional peer banks and the Bank.

The company uses four economic variables in its cash flow model:

national unemployment, Commercial Real Estate ("CRE") Price Index, House Price Index and Gross Domestic Product ("GDP"), which are incorporated by utilizing a Loss Driver Analysis approach that factors in historical losses, including during the Great Recession, of regional peer banks and the Bank.

The updated model incorporates a weighting of three economic scenarios;

1 unchanged sentence

The scenarios cover the four economic forecast variables, with each segment of the portfolio linked to two of these variables, depending on the segment.

The loss driver analysis is spread over a reasonable and supportable period of 18 months and reverts back to a historical loss rate over twelve months on a straight-line basis over the loan's remaining maturity.

The loss driver analysis is spread over a reasonable and supportable period of 18 months and reverts back to a

historical loss rate over twelve months on a straight-line basis over the loan's remaining maturity.

Management leverages economic projections from reputable and independent third parties to inform its loss driver forecasts over the forecast period.

We have several pass credit grades that are assigned to loans based on varying levels of risk, ranging from credits that are secured by cash or marketable securities, to watch credits which have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring.

Special mention loans are those that are currently protected by the sound net worth and paying capacity of the borrower, but that are potentially weak and constitute an additional credit risk.

We have several pass credit grades that are assigned to loans based on varying levels of risk, ranging from loans that are secured by cash or marketable securities, to watch list loans that have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring.

Special mention loans are those that are currently protected by the sound worth and paying capacity of the borrower, but that are potentially weak and constitute an additional credit risk.

These loans have the potential to deteriorate to a substandard grade due to the existence of financial or administrative deficiencies.

1 unchanged sentence

They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

Some substandard loans are inadequately protected by the sound net worth and paying capacity of the borrower and of the collateral pledged and may be considered impaired.

Some substandard loans are inadequately protected by the sound worth and paying capacity of the borrower and of the collateral pledged and may be considered impaired.

Substandard loans can be accruing or can be on nonaccrual depending on the circumstances of the individual loans.

Loans classified as doubtful have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection in full highly questionable and improbable.

Loans graded as doubtful have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection in full highly questionable and improbable.

The possibility of loss is extremely high.

All doubtful loans are on nonaccrual.

Classified loans represent the sum of loans graded substandard and doubtful.

The methodology used in the estimation of the allowance, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions.

All doubtful loans are accounted for on a nonaccrual basis.

Classified loans is the aggregation of loans graded substandard and doubtful.

The methodology used in the estimation of the ACL, which is performed at least quarterly, is designed to be dynamic and responsive to changes in portfolio credit quality and forecasted economic conditions.

Changes are reflected in the pool-basis allowance and individually assessed loans as the collectability of classified loans is evaluated with new information.

1 unchanged sentence

The review of the appropriateness of the allowance is performed by executive management and presented to management committees and the Audit Committee of the Board of Directors (the "Board").

The committees' reports to the Board are part of the Board review on a quarterly basis of our consolidated financial statements.

The committees' reports to the Board are part of the Board's review on a quarterly basis of our consolidated financial statements.

When management determines that foreclosure is probable, and for certain collateral-dependent loans where foreclosure is not considered probable, expected credit losses are based on the estimated fair value of the collateral adjusted for selling costs, when appropriate.

1 unchanged sentence

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate.

The contractual term excludes expected extensions, renewals and modifications unless management has a reasonable expectation that a borrower will result in financial difficulty.

The contractual term excludes expected extensions, renewals and modifications unless management has a reasonable expectation that a borrower will experience financial difficulty.

We do not measure an ACL on accrued interest receivable balances because these balances are written off in a timely manner as a reduction to interest income when loans are placed on nonaccrual status.

Collateral Dependent Financial Assets

Loans that do not share similar risk characteristics are evaluated on an individual basis.

For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

For collateral dependent loans for which the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the financial asset exceeds the net present value ("NPV") from the operation of the collateral.

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For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis.

If either criterion is met, the security’s amortized cost basis is written down to fair value through income.

If either criteria is

met, the security’s amortized cost basis is written down to fair value through income.

For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors.

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Any impairment that has not been recorded through an ACL is recognized in other comprehensive income, as a non-credit-related impairment.

The entire amount of an impairment loss is recognized in earnings only when:

The entire amount of an impairment loss is recognized in earnings (loss) only when:

(1) the Company intends to sell the security;

(2) it is more likely than not that the Company will have to sell the security before recovery of its amortized cost basis;

or (2) it is more likely than not that the Company will have to sell the security before recovery of its amortized cost basis;

or (3) the Company does not expect to recover the entire amortized cost basis of the security.

In all other situations, only the portion of the impairment loss representing the credit loss must be recognized in earnings, with the remaining portion being recognized in other comprehensive income, net of deferred taxes.

In all other situations, only the portion of the impairment loss representing the credit loss must be recognized in earnings (loss), with the remaining portion being recognized in other comprehensive income (loss), net of deferred taxes.

Changes in the ACL are recorded as a provision for (or reversal of) credit losses.

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The RUC on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur and is included in the RUC on the Company’s Consolidated Balance Sheets.

Goodwill Assessment

Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets acquired.

Goodwill is deemed to have an indefinite useful life and as such is not subject to amortization, and instead is subject to impairment testing, which must be conducted at least annually or upon the occurrence of a triggering event.

Various factors, such as the Company’s results of operations, the trading price of the Company’s common stock relative to the book value per share, macroeconomic conditions and conditions in the banking sector, inform whether a triggering event for an interim goodwill impairment test has occurred.

Goodwill is recorded and evaluated for impairment at its reporting unit, the Company.

The Company's policy is to test goodwill for impairment annually as of December 31, or on an interim basis if an event triggering an impairment assessment is determined to have occurred.

Goodwill is subject to impairment testing at the reporting unit level, which must be conducted at least annually, as well as when events or changes in circumstances indicate the assets might be impaired and/or upon the occurrence of a triggering event.

Goodwill is recorded and evaluated for impairment at its reporting unit, the Company.

The Company's policy is to test goodwill for impairment annually as of December 31, or on an interim basis if an event triggering an impairment assessment is determined to have occurred.

The Company has determined that it has a single reporting unit.

If the fair value of the reporting unit exceeds the book value, no write-down of recorded goodwill is required.

If the fair value of the reporting unit is less than book value, an expense may be required to write-down the related goodwill to the proper carrying value.

Any impairment would be recorded through a reduction of goodwill or other intangible asset and an offsetting charge to noninterest expense.

Testing of goodwill impairment comprises a two-step process.

First, the Company performs a qualitative assessment to evaluate relevant events or circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If the Company determines that it is more likely than not that an impairment has occurred, it proceeds to the quantitative impairment test, whereby it calculates the fair value of the reporting unit and compares it with its carrying amount, including goodwill.

In its performance of impairment testing, the Company has the unconditional option to proceed directly to the quantitative impairment test, bypassing the qualitative assessment.

If the carrying amount of the reporting unit exceeds the fair value, the amount by which the carrying amount exceeds fair value, up to the carrying value of goodwill, is recorded through earnings as an impairment charge.

If the results of the qualitative assessment indicate that it is not more likely than not that an impairment has occurred, or if the quantitative impairment test results in a fair value of the reporting unit that is greater than the carrying amount, then no impairment charge is recorded.

During the second quarter ended June 30, 2024, Management determined that a triggering event had occurred as a result of the share price trading under book value for more than four quarters due to changes in macroeconomic conditions and market volatility in the financial markets and the banking industry due to the impact from rising interest rates which resulted in fluctuations of the Company's stock price with a sustained decrease.

As a result of the triggering event, the Company engaged a third-party service provider to assist Management with the determination of the fair value of the Company in the second quarter of 2024.

The resulting calculations indicated that the fair value did not exceed the carrying amount of the Company's only reporting unit as of May 31, 2024 which resulted in a determination that goodwill had become fully impaired.

The goodwill impairment charge of $ 104.2 million reduced fully the carrying value of the Company's goodwill as of May 31, 2024.

The impaired goodwill was primarily related to the acquisition of the Virginia Heritage Bank in October 2014.

The impairment charge did not impact our cash flows, liquidity ratios, core operating performance, or regulatory capital ratios.

Segment Reporting

The Company has one reporting unit, one operating segment and, consequently, a single reportable segment.

Refer to Note 12 – Segment Reporting for further details.

New Authoritative Accounting Guidance

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2023-06, "Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative" ("ASU 2023-06") incorporates into the Accounting Standards Codification ("ASC" or "Codification") several SEC disclosure requirements under Regulations S-K and S-X.

Securities and Exchange Commission ("SEC") disclosure requirements under Regulations S-K and S-X.

The amendments in the ASU are intended to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.

These requirements are similar to, but require more information than, generally accepted accounting principles.

The new updates modify the disclosure or presentation requirements of a variety of Topics in the Codification.

These requirements are similar to, but require additional information than, generally accepted accounting principles.

These new updates modify the disclosure or presentation requirements of a variety of Topics in the Codification.

Entities should apply the amendments in ASU 2023-06 prospectively.

For entities subject to the SEC's existing disclosure requirements and for entities that have to file or provide financial statements with or to the SEC for the purpose of selling or issuing securities that do not have contractual limits on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules.

For entities subject to the SEC’s existing disclosure requirements and for entities that have to file or provide financial statements with or to the SEC for the purpose of selling or issuing securities that do not have contractual limits on transfer, the effective date for each amendment will be the date on which the SEC removes that

related disclosure from its rules.

As a result, the effective date will be different for each individual disclosure based on the effective date of the SEC’s deletion of the related disclosure.

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The ASU requires additional income tax disclosures around effective tax rates and cash income taxes paid.

ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024 and interim periods within those fiscal years.

The impact of ASU 2023-09 should be applied prospectively.

We are currently in the process of evaluating this guidance.

ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024.

The new disclosure requirements around effective tax rates and cash income taxes paid only applies to year-end.

There is no material impact to the interim disclosures.

2024-01, "Compensation—Stock Compensation (Topic 718):

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If the amendments are applied prospectively, an entity is required to disclose the nature of and reason for the change in accounting principle.

We are currently in the process of evaluating this guidance.

We have determined that the Company has not issued profits interests within the scope of this ASU.

2024-02, "Codification Improvements—Amendments to Remove References to the Concepts Statements" ("ASU 2024-02") amends the Accounting Standard Codification (“Codification”) by removing references to various concepts statements.

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An entity should apply the amendments using one of the following transition methods:

(i) prospectively to all new transactions recognized on or after the date that the entity first applies the amendments, or (ii) retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied.

(1) prospectively to all new transactions recognized on or after the date that the entity first applies the amendments, or (2) retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied.

We have removed all references to the Codification in our public filings.

2024-03, “ Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40);

Disaggregation of Income Statement Expenses” (“ASU 2024-03”) which requires disaggregated disclosure of income statement expenses for public business entities.

The ASU does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements at interim and annual reporting periods.

ASU 2024-03 adds to ASC 220-40 to require a footnote disclosure about specific expenses by requiring public business entities to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses:

(1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other types of depletion expenses.

The tabular disclosure would also include certain other expenses, when applicable.

ASU 2024-03 does not change or remove existing expense disclosure requirements;

however, it may affect where that information appears in the footnotes to the financial statements.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments in this update should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of

this Update or (2) retrospectively to any or all prior periods presented in the financial statements.

We are currently in the process of evaluating this guidance.

Accounting Standards Adopted in 2024 :

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures." ("ASU 2023-07") requires filers to disclose significant segment expenses, an amount and description for other segment items, the title and position of the entity’s chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measures of profit or loss to assess segment performance, and, on an interim basis, certain segment related disclosures that previously were required only on an annual basis.

ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements and that an entity is permitted to disclose multiple measures of segment profit or loss, provided that certain criteria are met.

ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

Since early adoption is permitted, the Company adopted the guidance prescribed under ASU 2023-07 effective January 1, 2024.

Adoption of this guidance did not have a material impact on our consolidated financial statements for fiscal year 2024.

Cash and Due from Banks

For the nine months ended September 30, 2024 and 2023, the Bank maintained an average daily balance at the Federal Reserve Bank of $ 1.6 billion and $ 0.9 billion, respectively, on which interest is paid.

Note 2 – Cash and Due from Banks

For the three months ended March 31, 2025 and 2024, the Bank maintained average daily balances at the Federal Reserve Bank of Richmond ("Federal Reserve Bank") of $ 1.4 billion and $ 1.9 billion, respectively, on which interest is paid.

Additionally, the Bank maintains interest-bearing balances with the Federal Home Loan Bank of Atlanta ("FHLB") and noninterest-bearing balances with domestic correspondent banks to cover associated costs for services they provide to the Bank.

Investment Securities

The amortized cost and estimated fair value of the Company's AFS and HTM securities are summarized as follows:

Note 3 – Investment Securities

The following tables summarize the Company's investment in AFS and HTM securities by major security type:

(dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Estimated Fair Value

September 30, 2024

March 31, 2025

Investment securities available-for-sale:

treasury bonds $ 49,970 $ — $ ( 567 ) $ — $ 49,403

agency securities $ 570,988 $ — $ ( 33,079 ) $ — $ 537,909

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(dollars in thousands) Amortized Cost Gross Unrecognized Gains Gross Unrecognized Losses Estimated Fair Value

September 30, 2024

March 31, 2025

Investment securities held-to-maturity:

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Total held-to-maturity securities, net of ACL $ 938,647

At September 30, 2024 and December 31, 2023, the Company held $ 37.7 million and $ 25.7 million, respectively, of equity securities in a combination of Federal Reserve System ("Federal Reserve Board," "Federal Reserve" or "FRB") and FHLB stocks, which are required to be held for regulatory purposes.

In addition, as of March 31, 2025 and December 31, 2024, the Company held $ 51.5 million and $ 51.8 million in non marketable equity securities, respectively, in a combination of Federal Reserve System ("Federal Reserve Board," "Federal Reserve" or "FRB") and FHLB stocks, which are required to be held for regulatory purposes.

These securities cannot be disposed of other than through redemption by the issuer and, if redeemed, would be redeemed at the original cost.

At September 30, 2024 and December 31, 2023, the Company had $ 46.5 million and $ 51.7 million, respectively, of unamortized unrealized losses outstanding following the transfer of investment securities from AFS to HTM in 2022.

The securities are carried at cost, classified as restricted securities, and periodically evaluated for impairment based on ultimate recovery of par value.

As of March 31, 2025 and December 31, 2024, the Company had $ 43.2 million and $ 44.8 million, respectively, of unamortized unrealized losses outstanding following the transfer of investment securities from AFS to HTM in 2022.

These unrealized losses are included in accumulated other comprehensive loss and are amortized through interest income as a yield adjustment over the remaining term of the securities.

Accrued interest receivable on investment securities totaled $ 7.4 million and $ 7.6 million at September 30, 2024 and December 31, 2023, respectively.

The accrued interest receivable is excluded from the amortized cost of the securities and is reported in other assets in the Consolidated Balance Sheets.

The following tables summarize AFS and HTM securities in an unrealized loss position by length of time:

Accrued interest receivable on investment securities totaled $ 6.7 million and $ 6.6 million as of March 31, 2025 and December 31, 2024, respectively.

The accrued interest on investment securities is excluded from the amortized cost of the securities and is reported in other assets in the Consolidated Balance Sheets.

The following tables summarize, by length of time, the Company's AFS securities that have been in a continuous unrealized loss position and HTM securities that have been in a continuous unrecognized loss position:

Less than 12 Months 12 Months or Greater Total

(dollars in thousands) Number of Securities Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses

September 30, 2024

March 31, 2025

Investment securities available-for-sale:

treasury bonds 2 $ — $ — $ 49,403 $ ( 567 ) $ 49,403 $ ( 567 )

agency securities 70 $ — $ — $ 537,909 $ ( 33,079 ) $ 537,909 $ ( 33,079 )

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(dollars in thousands) Number of Securities Estimated Fair Value Unrecognized Losses Estimated Fair Value Unrecognized Losses Estimated Fair Value Unrecognized Losses

September 30, 2024

March 31, 2025

Investment securities held-to-maturity:

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treasury bonds 1 $ — $ — $ 24,776 $ ( 212 ) $ 24,776 $ ( 212 )

2 $ — $ — $ 47,901 $ ( 1,993 ) $ 47,901 $ ( 1,993 )

agency securities 71 2,300 ( 8 ) 556,235 ( 41,734 ) 558,535 ( 41,742 )

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Total 222 $ 5,954 $ ( 152 ) $ 804,394 $ ( 119,419 ) $ 810,348 $ ( 119,571 )

Unrealized losses at September 30, 2024 were generally attributable to changes in market interest rates and interest spread relationships subsequent to the dates the securities were originally purchased and were considered to be temporary, and not due to credit quality concerns on the investment securities.

Unrealized losses as of March 31, 2025 were generally attributable to changes in market interest rates and interest spread relationships subsequent to the dates the securities were originally purchased, and were considered to be temporary, and not due to credit quality concerns on the investment securities.

The fair values of these securities are expected to recover as the securities approach their respective maturity dates.

The Company does not intend to sell and it is likely that it will not be required to sell the securities prior to their anticipated recovery.

The Company measures its AFS and HTM security portfolios for current expected credit losses as part of its ACL analysis.

For further information on provision for credit losses on AFS and HTM securities, including balances for the three and nine months ended September 30, 2024 and 2023, see Allowance for Credit Losses discussion in "Note 1.

The Company measures its AFS and HTM securities portfolios for current expected credit losses as part of its ACL analysis.

For further information on provision for credit losses on AFS and HTM securities, see Allowance for Credit Losses discussion in "Note 1.

Summary of Significant Accounting Policies".

At September 30, 2024, the Company had a total allowance of $ 17 thousand on its AFS securities and $ 1.2 million on its HTM securities, each of which primarily comprise allowances for corporate bonds.

As of March 31, 2025 and December 31, 2024, the Company had an allowance for credit losses outstanding of zero and $ 22 thousand, respectively, on its AFS securities and $ 1.28 million and $ 1.31 million, respectively, on its HTM securities, each of which primarily comprise allowances for corporate bonds.

The following table summarizes the Company's investment in AFS securities and HTM securities by contractual maturity.

Expected maturities for mortgage-backed securities ("MBS") will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

September 30, 2024

March 31, 2025

(dollars in thousands) Amortized Cost Estimated Fair Value

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Total $ 2,254,550 $ 2,034,767

For the three and nine months ended September 30, 2024, gross realized gains on calls of investment securities were $ 3 thousand and $ 10 thousand, respectively, as compared to $ 5 thousand and $ 126 thousand for the three and nine months ended September 30, 2023.

There were no gross realized losses on sales or calls of investment securities during the three and nine months ended September 30, 2024, no r during the three months ended September 30, 2023.

During the nine months ended September 30, 2023, there were $ 140 thousand of gross realized losses on sales or calls of investment securities.

Gross sales and call proceeds were $ 4.5 million and $ 31.6 million for the three and nine months ended September 30, 2024, respectively, and $ 2.6 million and $ 11.2 million for the same periods in 2023.

The book value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase, and certain lines of credit with correspondent banks at September 30, 2024 and December 31, 2023 was $ 1.4 billion and $ 2.1 billion, respectively.

These balances were well in excess of required amounts in order to operationally provide significant reserve amounts for new business.

As of September 30, 2024 and December 31, 2023, there were no holdings of securities of any one issuer, other than the U.S.

During the three months ended March 31, 2025 and 2024, proceeds from the sale or call of investment securities were $ 50.1 million, and $ 27.1 million, respectively.

For the three months ended March 31, 2025 and 2024, gross realized gains on sales and calls of investment securities were $ 5 thousand and $ 4 thousand, respectively.

There were $ 1 thousand and none in gross realized losses on sales or calls of investment securities during the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025 and December 31, 2024, the book value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase and certain lines of credit with correspondent banks was $ 626.8 million and $ 369.1 million, respectively, which were well in excess of required amounts in order to operationally provide significant reserve amounts for new business.

As of March 31, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S.

Government and U.S.

agency securities, that exceeded ten percent of shareholders' equity.

Loans and Allowance for Credit Losses

agency securities, which exceeded ten percent of shareholders’ equity.

Note 4 – Loans and Allowance for Credit Losses

The Bank makes loans to customers primarily in the Washington, D.C.

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A substantial portion of the Bank’s loan portfolio consists of loans to businesses secured by real estate and other business assets.

HFI Loans, net of unamortized deferred fees and costs, at September 30, 2024 and December 31, 2023 are summarized by portfolio segment as follows:

September 30, 2024 December 31, 2023

(dollars in thousands, except amounts in the footnote) Amount % Amount %

HFI Loans, net of unamortized net deferred fees, as of March 31, 2025 and December 31, 2024 are summarized by portfolio segment as follows:

March 31, 2025 December 31, 2024

(dollars in thousands) Amount %

Commercial $ 1,178,343 15 % $ 1,183,341 15 %

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$ 7,813,837 $ 7,820,498

(1) Excludes accrued interest receivable of $ 43.4 million and $ 45.3 million at September 30, 2024 and December 31, 2023, respectively, which were recorded in other assets on the Consolidated Balance Sheets.

Unamortized net deferred costs amounted to $ 20.7 million and $ 27.0 million at September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31, 2023, the Bank serviced $ 56.0 million and $ 328.0 million, respectively, of SBA loans and other loan participations that are not reflected as loan balances on the Consolidated Balance Sheets.

During the nine months ended September 30, 2024, the Company sold the servicing rights to all FHA loans.

(1) Excludes accrued interest receivable of $ 41.9 million and $ 42.9 million as of March 31, 2025 and December 31, 2024, respectively, which were recorded in other assets on the Consolidated Balance Sheets.

Unamortized net deferred fees and costs were $ 18.1 million and $ 18.8 million as of March 31, 2025 and December 31, 2024, respectively.

During the three months ended March 31, 2025, certain loans were reclassified from HFI to HFS loans with the mark-to-market value of $ 15.3 million as reported on the Consolidated Balance Sheets.

As of March 31, 2025 and December 31, 2024, the Bank serviced $ 70.0 million and $ 63.7 million, respectively, of SBA loans and other loan participations, which are not reflected as loan balances on the Consolidated Balance Sheets.

During the year ended December 31, 2024, the Company sold the remaining servicing rights to all FHA loans.

Real estate loans are secured primarily by duly recorded first deeds of trust or mortgages.

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Loans intended for residential land acquisition, lot development and construction are made on the premise that the land:

1) is or will be developed for building sites for residential structures, and 2) will ultimately be utilized for construction or improvement of residential zoned real properties, including the creation of housing.

1) is or will be developed for building sites for residential structures;

and 2) will ultimately be utilized for construction or improvement of residential zoned real properties, including the creation of housing.

Residential development and construction loans will finance projects such as single family subdivisions, planned unit developments, townhouses and condominiums.

Residential land acquisition, development and construction loans generally are underwritten with a maximum term of 36 months, including extensions approved at origination.

Residential land acquisition, development and construction ("ADC") loans generally are underwritten with a maximum term of 36 months, including extensions approved at origination.

Commercial land acquisition and construction loans are secured by real property where loan funds will be used to acquire land and to construct or improve appropriately zoned real property for the creation of income producing or owner-occupied commercial properties.

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Substantially all construction draw requests must be presented in writing on American Institute of Architects documents and certified either by the contractor, the borrower and/or the borrower’s architect.

Each draw request shall also include the borrower's soft cost breakdown certified by the borrower or their agent.

Each draw request shall also include the borrower’s soft cost breakdown certified by the borrower or their Chief Financial Officer.

Prior to an advance, the Bank or its contractor inspects the project to determine that the work has been completed, to justify the draw requisition.

Commercial permanent loans are generally secured by improved real property that is generating income in the normal course of operation.

Commercial permanent loans are generally secured by improved real property which is generating income in the normal course of operation.

Debt service coverage, assuming stabilized occupancy, must be satisfactory to support a permanent loan.

The debt service coverage ratio is ordinarily at least 1.15 to 1.0 .

As part of the underwriting process, debt service coverage ratios are stress tested assuming a 200 basis point increase in interest rates from their current levels.

The debt service coverage ratio ("DSCR") is ordinarily at least 1.15 to 1.0.

As part of the underwriting process, DSCRs are stress tested assuming a 200 basis point increase in interest rates from their current levels.

Commercial permanent loans generally are underwritten with a term not greater than 10 years or the remaining useful life of the property, whichever is lower.

The preferred term is between 5 to 7 years, with amortization to a maximum of 25 years.

The Company's loan portfolio includes acquisition, development and construction ("ADC") real estate loans including both investment and owner-occupied projects.

ADC loans amounted to $ 1.8 billion at September 30, 2024.

The preferred term is between five to seven years , with amortization to a maximum of 25 years.

The Company’s loan portfolio includes ADC real estate loans including both investment and owner occupied projects.

ADC loans amounted to $ 1.8 billion as of March 31, 2025.

A portion of the ADC portfolio, both speculative and non-speculative, includes loan funded interest reserves at origination.

ADC loans that provide for the use of interest reserves represent approximately 59.6 % of the outstanding ADC loan portfolio at September 30, 2024.

ADC loans that provide for the use of interest reserves represent approximately 54 % of the outstanding ADC loan portfolio as of March 31, 2025.

The decision to establish a loan-funded interest reserve is made upon origination of the ADC loan and is based upon a number of factors considered during underwriting of the credit including:

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(3) the creditworthiness of the borrower and guarantors;

(4) the borrower equity contribution;

(4) borrower equity contribution;

and (5) the level of collateral protection.

When appropriate, an interest reserve provides a means of addressing the cash flow characteristics of a properly underwritten ADC loan.

When appropriate, an interest reserve provides an effective means of addressing the cash flow characteristics of a properly underwritten ADC loan.

The Company does not significantly utilize interest reserves in other loan products.

The Company recognizes that one of the risks inherent in the use of interest reserves is the potential masking of underlying problems with the project and/or the borrower’s ability to repay the loan.

In order to mitigate these inherent risks, the Company employs a series of reporting and monitoring mechanisms on all ADC loans, whether or not an interest reserve is provided, including:

(1) construction and development timelines that are monitored on an ongoing basis and track the progress of a given project to the timeline projected at origination;

In order to mitigate this inherent risk, the Company employs a series of reporting and monitoring mechanisms on all ADC loans, whether or not an interest reserve is provided, including:

(1) construction and development timelines which are monitored on an ongoing basis which track the progress of a given project to the timeline projected at origination;

(2) a construction loan administration department independent of the lending function;

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(4) monthly interest reserve monitoring reports detailing the balance of the interest reserves approved at origination and the days of interest carry represented by the reserve balances as compared to the then current anticipated time to completion and/or sale of speculative projects;

and (5) quarterly commercial real estate construction meetings among senior Company management, which include monitoring of current and projected real estate market conditions.

and (5) quarterly commercial real estate construction meetings among senior Company management, which includes monitoring of current and projected real estate market conditions.

If a project has not performed as expected, it is not the customary practice of the Company to increase loan funded interest reserves.

The following table details activity in the ACL by portfolio segment for the three and nine months ended September 30, 2024 and 2023.

The following table details activity in the ACL by portfolio segment for the three months ended March 31, 2025 and 2024.

PPP loans are excluded from these tables since they do not carry an allowance for credit loss, as these loans are fully guaranteed as to principal and interest by the SBA, whose guarantee is backed by the full faith and credit of the U.S.

Allocation of a portion of the allowance to one category of loans does not restrict the use of the allowance to absorb losses in other categories.

Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

(dollars in thousands) Commercial Income Producing - Commercial Real Estate Owner Occupied - Commercial Real Estate Real Estate Mortgage - Residential Construction -Commercial and Residential Construction - C&I (Owner Occupied) Home Equity Other Consumer Total

Three Months Ended September 30, 2024

Allowance for credit losses:

Balance at beginning of period $ 21,011 $ 53,251 $ 15,641 $ 750 $ 13,510 $ 1,431 $ 677 $ 30 106,301

Loans charged-off ( 1,563 ) — ( 3,800 ) — — — — ( 17 ) ( 5,380 )

Recoveries of loans previously charged-off 53 — 24 — — — — — 77

Net loans (charged-off) recovered ( 1,510 ) — ( 3,776 ) — — — — ( 17 ) ( 5,303 )

Provision for (reversal of) credit losses 802 61 8,206 ( 12 ) 1,907 ( 134 ) 23 16 10,869

Ending balance $ 20,303 $ 53,312 $ 20,071 $ 738 $ 15,417 $ 1,297 $ 700 $ 29 $ 111,867

Nine Months Ended September 30, 2024

Allowance for credit losses:

Balance at beginning of period $ 17,824 $ 40,050 $ 14,333 $ 861 $ 10,198 $ 1,992 $ 657 $ 25 $ 85,940

Loans charged-off ( 4,150 ) ( 21,329 ) ( 3,800 ) — ( 129 ) — — ( 88 ) ( 29,496 )

Recoveries of loans previously charged-off 220 185 71 — — — — — 476

Net loans (charged-off) recovered ( 3,930 ) ( 21,144 ) ( 3,729 ) — ( 129 ) — — ( 88 ) ( 29,020 )

Provision for (reversal of) credit losses 6,409 34,406 9,467 ( 123 ) 5,348 ( 695 ) 43 92 54,947

Ending balance $ 20,303 $ 53,312 $ 20,071 $ 738 $ 15,417 $ 1,297 $ 700 $ 29 $ 111,867

Three Months Ended September 30, 2023

Three Months Ended March 31, 2025

Allowance for credit losses:

Balance at beginning of period $ 15,374 $ 38,486 $ 12,805 $ 811 $ 8,018 $ 1,914 $ 595 $ 26 $ 78,029

Balance at beginning of year $ 19,390 $ 55,185 $ 22,654 $ 610 $ 14,585 $ 1,282 $ 653 $ 31 $ 114,390

Loans charged-off ( 270 ) ( 6,170 ) ( 4,862 ) — — — — ( 4 ) ( 11,306 )

Recoveries of loans previously charged-off 53 — 23 — — — — — 76

Net loans (charged-off) recovered ( 364 ) — 23 — — — — 1 ( 340 )

Net loans (charged-off) and recovered ( 217 ) ( 6,170 ) ( 4,839 ) — — — — ( 4 ) ( 11,230 )

Provision for (reversal of) credit losses 1,489 12,922 9,057 60 2,306 398 71 6 26,309

Ending balance $ 20,662 $ 61,937 $ 26,872 $ 670 $ 16,891 $ 1,680 $ 724 $ 33 $ 129,469

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Allowance for credit losses:

Balance at beginning of period $ 15,655 $ 35,688 $ 12,702 $ 969 $ 7,195 $ 1,606 $ 555 $ 74 $ 74,444

Balance at beginning of year $ 17,824 $ 40,050 $ 14,333 $ 861 $ 10,198 $ 1,992 $ 657 $ 25 $ 85,940

Loans charged-off ( 496 ) ( 20,943 ) — — ( 129 ) — — ( 1 ) ( 21,569 )

Recoveries of loans previously charged-off 115 — 24 — — — — — 139

Net loans (charged-off) recovered ( 1,493 ) ( 5,306 ) 31 — ( 102 ) — — ( 44 ) ( 6,914 )

Net loans (charged-off) and recovered ( 381 ) ( 20,943 ) 24 — ( 129 ) — — ( 1 ) ( 21,430 )

Provision for (reversal of) credit losses 6,239 26,830 ( 820 ) 32 2,989 ( 63 ) ( 39 ) 6 35,174

Ending balance $ 23,682 $ 45,937 $ 13,537 $ 893 $ 13,058 $ 1,929 $ 618 $ 30 $ 99,684

The following table presents the amortized cost basis of collateral-dependent HFI loans by class of loans as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

Business/Other Business/Other

(dollars in thousands) Assets Real Estate Assets Real Estate

The following table presents the amortized cost basis of collateral-dependent HFI loans by portfolio segment as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

(dollars in thousands) Business/Other Assets Real Estate Business/Other Assets Real Estate

Commercial $ 4,762 $ 295 $ 1,214 $ 1,125

1 unchanged sentence

Owner occupied - commercial real estate 303 34,581 — 37,746

Real estate mortgage - residential — — — 1,692

Construction - commercial and residential — — — 525

Home equity 298 — — 303

2 unchanged sentences

The Company uses several credit quality indicators to manage credit risk in an ongoing manner.

The Company's primary credit quality indicators inform an internal credit risk rating system that categorizes loans into pass, watch, special mention, or classified categories.

The Company’s primary credit quality indicator is an internal credit risk rating system that categorizes loans into pass, special mention or classified categories.

Credit risk ratings are applied individually to those classes of loans that have significant or unique credit characteristics that benefit from a case-by-case evaluation.

These are typically loans to businesses or individuals in the classes that comprise the commercial portfolio segment.

These are typically loans to businesses or individuals in the classes which comprise the commercial portfolio segment.

Groups of loans that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk rated and monitored collectively.

These are typically loans to individuals in the classes that comprise the consumer portfolio segment.

These are typically loans to individuals in the classes which comprise the consumer portfolio segment.

The following are the definitions of the Company’s credit quality indicators:

14 unchanged sentences

Based on the most recent analysis performed, the amortized cost basis of HFI loans by risk category, class and year of origination, along with any charge-offs that were recorded in the applicable loan segment, if applicable, were as follows:

(dollars in thousands) Prior 2020 2021 2022 2023 2024 Revolving Loans Amort.

(dollars in thousands) Prior 2021 2022 2023 2024 2025

Revolving Loans Amort.

Cost Basis Revolving Loans Convert.

to Term Total

September 30, 2024

March 31, 2025

Pass $ 146,830 $ 51,001 $ 64,916 $ 66,402 $ 104,217 $ 78,240 $ 543,335 $ 279 $ 1,055,220

19 unchanged sentences

Total 21,648 9,185 12,129 5,859 — — — — 48,821

YTD Gross Charge-offs — — — — — — — — —

Construction - commercial and residential:

Pass 63,947 150,327 605,757 211,113 8,711 — 131,911 996 1,172,762

Special Mention

— 8,614 — — — — — — 8,614

Substandard 5,683 4,922 18,807 — — — — — 29,412

Total 69,630 163,863 624,564 211,113 8,711 — 131,911 996 1,210,788

YTD gross charge-offs ( 129 ) — — — — — — — ( 129 )

Construction - C&I (owner occupied):

Pass 30,555 — 6,733 8,526 32,632 4,150 821 — 83,417

Total 6,212 49,996 — 35,098 8,514 — 842 — 100,662

Pass 2,171 35 115 — — — 47,254 — 49,575

7 unchanged sentences

Total YTD gross charge-offs $ ( 11,035 ) $ — $ — $ ( 20 ) $ — $ — $ ( 250 ) $ ( 1 ) $ ( 11,306 )

(dollars in thousands) Prior 2019 2020 2021 2022 2023 Revolving Loans Amort.

(dollars in thousands) Prior 2020 2021 2022 2023 2024

Revolving Loans Amort.

Cost Basis Revolving Loans Convert.

7 unchanged sentences

Pass — — 287 — — — — — 287

Total — — — 528 — — — — 528

Income producing - commercial real estate:

12 unchanged sentences

Pass 20,080 2,435 9,972 12,181 5,867 — — — 50,535

Substandard 4,170 — — — — — — — 4,170

Total 20,080 2,435 9,972 12,181 5,867 — — — 50,535

YTD Gross Charge-offs — — — — — — — — —

Construction - commercial and residential:

Pass 26,739 38,385 199,933 595,496 202,577 7,588 124,508 — 1,195,226

Special Mention

— — 4,964 — — — — — 4,964

Substandard 5,683 — 4,890 — — — — — 10,573

6 unchanged sentences

Total 1,425 71 257 116 — — 48,496 765 51,130

YTD Gross Charge-offs — — — — — — — — —

Other consumer:

Pass 3 — — — — 49 1,006 — 1,058

Total 1 — — — 46 — 354 — 401

YTD gross charge-offs ( 70 ) — — — — — ( 17 ) ( 1 ) ( 88 )

7 unchanged sentences

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following table presents, by portfolio segment, the nonaccrual HFI loans amortized cost basis as of September 30, 2024 and December 31, 2023:

(dollars in thousands, except amounts in footnotes) Nonaccrual with No Allowance for Credit Losses Nonaccrual with an Allowance for Credit Losses Total Nonaccrual Loans

September 30, 2024

Commercial $ 1,479 $ 451 $ 1,930

Income producing - commercial real estate 47,224 47,058 94,282

Owner occupied - commercial real estate 642 37,088 37,730

Real estate mortgage - residential — 172 172

Construction - commercial and residential — — —

Home equity 257 — 257

$ 49,602 $ 84,769 $ 134,371

December 31, 2023

The following table presents, by portfolio segment, information related to the amortized cost basis of nonaccrual HFI loans as of March 31, 2025 and December 31, 2024.

March 31, 2025 December 31, 2024

(dollars in thousands) Nonaccrual with No Allowance for Credit Loss Nonaccrual with an Allowance for Credit Losses Total Nonaccrual Loans Nonaccrual with No Allowance for Credit Loss Nonaccrual with an Allowance for Credit Losses Total Nonaccrual Loans

Commercial $ 3,727 $ 601 $ 4,328 $ 1,439 $ 609 $ 2,048

2 unchanged sentences

Real estate mortgage - residential — 144 144 — 157 157

Construction - commercial and residential — 525 525

Home equity 298 — 298 303 — 303

$ 93,025 $ 107,416 $ 200,441 $ 49,608 $ 159,098 $ 208,706

(1) Gross coupon interest income of approximately $ 5.9 million and $ 4.1 million would have been recorded for the nine months ended September 30, 2024 and 2023, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while no coupon interest income was actually recorded on such loans for the nine months ended September 30, 2024 and 2023, respectively.

The table presents, by portfolio segment, an aging analysis and the recorded investments in HFI loans past due, on an amortized cost basis as of September 30, 2024 and December 31, 2023:

(1) Gross coupon interest income of $ 3.1 million, and $ 1.3 million would have been recorded for the three months ended March 31, 2025 and 2024, respectively, if nonaccrual loans shown above had been current and in accordance with their original terms, while interest actually recorded on such loans were $ 1.6 million, and none for the three months ended March 31, 2025 and 2024, respectively.

See Note 1 to the Consolidated Financial Statements for a description of the Company’s policy for placing loans on nonaccrual status.

The following table presents, by portfolio segment, an aging analysis and the recorded investments in HFI loans past due as of March 31, 2025 and December 31, 2024:

(dollars in thousands) Loans 30-59 Days Past Due Loans 60-89 Days Past Due Loans 90 Days or More Past Due Total Past Due Loans Current Loans Nonaccrual Loans Total Recorded Investment in Loans

September 30, 2024

March 31, 2025

Commercial $ 8,492 $ 304 $ — $ 8,796 $ 1,165,219 $ 4,328 $ 1,178,343

8 unchanged sentences

Total $ 50,908 $ 32,090 $ — $ 82,998 $ 7,659,867 $ 200,441 $ 7,943,306

(dollars in thousands) Loans 30-59 Days Past Due Loans 60-89 Days Past Due Loans 90 Days or More Past Due Total Past Due Loans Current Loans Nonaccrual Loans Total Recorded Investment in Loans

December 31, 2024

10 unchanged sentences

Loan Modifications for Borrowers Experiencing Financial Difficulty

The Company evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan.

The Company evaluates all loan modifications according to the accounting guidance to determine if the modification results in a new loan or a continuation of the existing loan.

Loan modifications to borrowers experiencing financial difficulties that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the listed modifications.

Therefore, the disclosures related to loan restructurings are for modifications which have a direct impact on cash flows.

Modifications with terms not as favorable to the Company as the terms for comparable loans to other customers with similar collection risk who are not refinancing or restructuring a loan with the Company and which have a direct impact on cash flows are considered modified loans to borrowers experiencing financial difficulty.

The Company may offer various types of modifications when restructuring a loan.

9 unchanged sentences

The allowance may be increased, adjustments may be made in the allocation of the allowance, or partial charge-offs may be taken to further write-down the carrying value of the loan.

The following tables present the amortized cost basis as of September 30, 2024 and 2023 and the financial effect of HFI loans modified to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024 and 2023:

September 30, 2024

(dollars in thousands) Term Extension Combination - Term Extension and Principal Payment Delay Combination - Interest Rate Reduction and Principal Payment Delay Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction Total Percentage of Total Loan Type Weighted Average Term and Principal Payment Extension Weighted Average Interest Rate Reduction

Three months ended September 30, 2024

Commercial $ 11,328 $ 28,776 $ — $ — $ 40,104 3.5 % 10 months — %

Income producing - commercial real estate 27,535 69,023 — — 96,558 2.3 % 12 months — %

Owner occupied - commercial real estate — — — — — — % — — %

Construction - commercial and residential — — — — — — % — — %

Total $ 38,863 $ 97,799 $ — $ — $ 136,662

Nine months ended September 30, 2024:

The following table presents the amortized cost basis as of March 31, 2025 and 2024, and the financial effect of HFI loans modified to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and 2024:

(dollars in thousands) Term Extension Combination - Term Extension and Principal Payment Delay Total Percentage of Total Loan Type Weighted Average Term and Principal Payment Extension (1)

Weighted Average Interest Rate Reduction (2)

March 31, 2025

Commercial $ 3,310 $ 9,440 $ 12,750 1.1 % 12 months — %

Income producing - commercial real estate 27,535 171,851 — 3,513 202,899 4.9 % 10 months 3.59 %

Owner occupied - commercial real estate 874 — — — 874 0.1 % 12 months — %

Construction - commercial and residential — 11,030 — — 11,030 0.9 % 9 months — %

Income producing - commercial real estate

— 70,296 70,296 1.8 % 5 months — %

Total $ 3,310 $ 79,736 $ 83,046

September 30, 2023

Three months ended September 30, 2023:

March 31, 2024

Commercial $ 31,553 $ — $ 31,553 2.2 % 4 months — %

Income producing - commercial real estate 7,190 55,649 — 113,833 176,672 4.3 % 10 months 1.89 %

Owner occupied - commercial real estate — 19,125 — — 19,125 1.6 % 3 months — %

Income producing - commercial real estate

— 50,926 50,926 1.3 % 3 months — %

Real estate mortgage - residential — 2,478 2,478 3.4 % 6 months — %

Total $ 31,553 $ 53,404 $ 84,957

Nine months ended September 30, 2023:

Commercial $ 36,969 $ — $ — $ — $ 36,969 2.6 % 7 months — %

Income producing - commercial real estate 7,190 57,808 — 113,833 178,831 4.3 % 13 months 2.55 %

Owner occupied - commercial real estate — 19,125 — — 19,125 1.6 % 9 months — %

Construction - commercial and residential 7,093 — — — 7,093 0.8 % 6 months — %

(1) For loans that received multiple modifications during the year, weighted average term and principal payment extensions were calculated based on the aggregate impact of the extensions received during the period.

(2) The weighted average is calculated based on the total amortized cost of loans, at the year-end, that received interest rate reduction modifications during the year.

The following table presents the performance of HFI loans modified during the prior twelve months to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and 2024:

March 31, 2025

Payment Status (Amortized Cost Basis)

(dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due Nonaccrual

Commercial $ 46,010 $ — $ — $ —

Income producing - commercial real estate 172,099 — — 84,442

Owner occupied - commercial real estate 863 — — —

Construction - commercial and residential 9,942 10,605 — —

Total $ 228,914 $ 10,605 $ — $ 84,442

The following table presents the performance of HFI loans modified during the prior twelve months to borrowers experiencing financial difficulty:

September 30, 2024

March 31, 2024

Payment Status (Amortized Cost Basis)

(dollars in thousands) Current 30-89 Days Past Due Nonaccrual

(dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due Nonaccrual

Commercial $ 37,308 $ 1,467 $ — $ —

1 unchanged sentence

Owner occupied - commercial real estate — — — 19,127

Real estate mortgage - residential — — —

Construction - commercial and residential — 6,532 — —

Real estate mortgage - residential 2,478 — — —

Total $ 144,249 $ 7,999 $ — $ 85,263

1 unchanged sentence

To determine the existence of a payment default, the Company analyzes the economic conditions that exist for each borrower and their ability to generate positive cash flow during a given loan's term.

The following table presents the amortized cost basis of HFI loans that were experiencing payment default as of September 30, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty:

September 30, 2024

The following table presents the amortized cost basis of HFI loans that were experiencing payment default as of March 31, 2025 and December 31, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty:

March 31, 2025

Amortized Cost Basis

(dollars in thousands) Term Extension Combination - Term Extension and Principal Payment Delay Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction

Commercial $ 3,321 $ — $ —

Income producing - commercial real estate $ — $ 84,442 $ —

Owner occupied - commercial real estate — — —

Construction - commercial and residential — 10,605 —

Total $ — $ 95,047 $ —

December 31, 2024

Amortized Cost Basis

(dollars in thousands) Term Extension Combination - Term Extension and Principal Payment Delay Combination - Term Extension, Principal Payment Delay and Interest Rate Reduction

Commercial $ 5,384 $ — $ —

Income producing - commercial real estate — 131,730 —

Total $ 5,384 $ 131,730 $ —

The Company individually evaluates nonaccrual loans when performing its CECL estimate to calculate the ACL.

2 unchanged sentences

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL is adjusted by the same amount.

Note 5 – Leases

The Company accounts for leases in accordance with ASC Topic 842.

1 unchanged sentence

Substantially all of the leases in which the Company is the lessee comprise real estate for branch offices, ATM locations and corporate office space.

Substantially all of our leases are classified as operating leases and are included in operating lease right-of-use ("ROU") assets and operating lease liabilities on the Consolidated Balance Sheets.

As of September 30, 2024 and December 31, 2023, the Company had $ 15.2 million and $ 19.1 million of operating lease ROU assets, respectively, and $ 18.8 million and $ 23.2 million of operating lease liabilities, respectively, on the Company's Consolidated Balance Sheets.

The Company elects not to recognize ROU assets and lease liabilities arising from short-term leases, leases with initial terms of twelve months or less, or equipment leases (deemed immaterial) on the Consolidated Balance Sheets.

Substantially all of our leases are classified as operating leases and are included in operating lease right-of-use ("ROU") assets and operating lease liabilities in the Consolidated Balance Sheet.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

In determining the present value of the lease payments, we use the implicit lease rate if available.

If the implicit lease rate is not available, we use the incremental borrowing rate at commencement date.

The incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.

As of March 31, 2025 and December 31, 2024, the Company had $ 32.8 million and $ 18.5 million of operating lease ROU assets respectively, and $ 38.5 million and $ 23.8 million of operating lease liabilities respectively, on the Company’s Consolidated Balance Sheets.

The Company elects not to recognize ROU assets and lease liabilities arising from short-term leases, leases with initial terms of twelve months or less or equipment leases (deemed immaterial) on the Consolidated Balance Sheet.

The leases contain options to extend or terminate the lease, which are recognized as part of the ROU assets and lease liabilities when an economic benefit to exercise the option exists and there is a 90 % probability that the Company will exercise the option.

If these criteria are not met, the options are not included in ROU assets and lease liabilities.

As of September 30, 2024, the Company's leases do not contain material residual value guarantees or impose restrictions or covenants related to dividends or its ability to incur additional financial obligations.

During the nine months ended September 30, 2024, the Company did not enter into new leases nor renew any leases.

However, during the same period, the Company did extend two existing leases, one each in Maryland and District of Columbia, and two additional leases expired.

If these criteria are not met, the options are not included in our ROU assets and lease liabilities.

As of March 31, 2025, our leases do not contain material residual value guarantees or impose restrictions or covenants related to dividends or the Company’s ability to incur additional financial obligations.

During the three months ended March 31, 2025, the Company commenced a new lease for its future headquarters at 7500 Old Georgetown Road in downtown Bethesda, MD.

The lease commencement date was January 1, 2025, and it matures on July 31, 2037.

The following table presents lease costs and other lease information.

Three Months Ended Nine Months Ended

(dollars in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Three Months Ended March 31,

(dollars in thousands) 2025 2024

Operating lease cost (cost resulting from lease payments) $ 1,892 $ 1,601

3 unchanged sentences

Operating lease - operating cash flows (fixed payments) $ 1,499 $ 1,778

(dollars in thousands) September 30, 2024 December 31, 2023

(dollars in thousands) March 31, 2025 December 31, 2024

Right-of-use assets - operating leases $ 32,769 $ 18,494

Operating lease liabilities $ 38,484 $ 23,815

Weighted average lease term - operating leases 4.57 yrs 4.93 yrs

Weighted average lease term - operating leases (in years)

Weighted average discount rate - operating leases 3.57 % 3.03 %

Future minimum payments for operating leases with initial or remaining terms of more than one year as of September 30, 2024 were as follows:

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2025 were as follows:

(dollars in thousands)

Twelve months ended:

September 30, 2025 $ 6,821

September 30, 2026 3,580

September 30, 2027 2,753

September 30, 2028 2,207

September 30, 2029 1,857

March 31, 2026 $ 5,445

March 31, 2027 4,692

March 31, 2028 4,922

March 31, 2029 4,785

March 31, 2030 4,272

Thereafter 22,321

2 unchanged sentences

Present value of net future minimum lease payments $ 38,484

Goodwill and Intangibles

Intangible assets are included in the Consolidated Balance Sheets as a separate line item, net of accumulated amortization and consist of the following items:

(dollars in thousands) Gross

Assets Additions Accumulated

Amortization Impairment Net

September 30, 2024:

Goodwill $ 104,168 $ — $ — $ ( 104,168 ) $ —

Excess servicing (1)

37 — ( 16 ) — 21

Non-compete agreements 720 — ( 720 ) — —

Total $ 104,925 $ — $ ( 736 ) $ ( 104,168 ) $ 21

December 31, 2023:

Goodwill $ 104,168 $ — $ — $ — $ 104,168

Excess servicing (1)

65 — ( 28 ) — 37

Non-compete agreements — 1,234 ( 514 ) — 720

Total $ 104,233 $ 1,234 $ ( 542 ) $ — $ 104,925

(1) The Company recognizes a servicing asset for the computed value of servicing fees on the sale of multifamily FHA loans and the sale of the guaranteed portion of SBA loans.

Assumptions related to loan terms and amortization are made to arrive at the initial recorded values.

As a result of the triggering event, the Company engaged a third-party service provider to assist Management with the determination of the fair value of the Company in the second quarter of 2024.

The goodwill impairment charge of $ 104.2 million reduced fully the carrying value of the Company's goodwill as of May 31, 2024.

The impaired goodwill is primarily related to the acquisition of the Virginia Heritage Bank in October 2014.

The impairment charge did not impact our cash flows, liquidity ratios, core operating performance, or regulatory capital ratios.

Note 6 – Derivatives and Hedging Activities

The Company is exposed to certain risks arising from both its business operations and economic conditions.

The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities.

The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities through the use of derivative financial instruments.

The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its assets and liabilities and the use of derivative financial instruments.

Cash Flow Hedges of Interest Rate Risk

The Company historically utilized interest rate swaptions, accounted for as cash flow hedges, to protect itself against adverse fluctuations in interest rates on a forecasted issuance of debt.

During the quarter ended March 31, 2024, the Company terminated its interest rate swaption contracts and discontinued the associated hedging relationship.

The amount in accumulated other comprehensive loss related to the swaption contracts is being amortized over the remainder of the hedged transaction.

The Company expects to reclassify the remaining $ 57 thousand out of accumulated other comprehensive loss over the next two quarters as a reduction of interest expense.

During the year ended December 31, 2024, the Company terminated its interest rate swaption contracts and discontinued the associated hedging relationship.

The unamortized amount in accumulated other comprehensive income (loss) related to those swaption contracts was reclassified as a reduction to interest expense.

Interest Rate Products

1 unchanged sentence

The Company executes interest rate caps and swaps with commercial banking customers to facilitate their respective risk management strategies.

Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net market risk exposure resulting from such transactions.

As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

At September 30, 2024, the Company had posted $ 10.2 million of cash collateral with other financial institutions and held $ 9.2 million of cash collateral on behalf of other financial institutions.

Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.

The Company entered into credit risk participation agreements (“RPAs”) with institutional counterparties, under which the Company assumes its pro-rata share of the credit exposure associated with a borrower’s performance related to interest rate derivative contracts in exchange for a fee.

5 unchanged sentences

The Company minimizes this risk by entering into derivative contracts with only large, stable financial institutions, and the Company has not experienced, and does not expect, any losses from counterparty nonperformance on the interest rate derivatives.

The Company monitors counterparty risk in accordance with the provisions of ASC Topic 815, "Derivatives and Hedging." In addition, the interest rate derivative agreements contain language outlining collateral-pledging requirements for each counterparty.

The Company monitors counterparty risk in accordance with the provisions of ASC 815, "Derivatives and Hedging." In addition, the interest rate derivative agreements contain language outlining collateral-pledging requirements for each counterparty.

As of March 31, 2025, the Company had posted $ 43.1 million of cash collateral with other financial institutions and held $ 57.5 million of cash collateral on behalf of other financial institutions.

The interest rate derivative agreements detail:

1) that collateral be posted when the market value exceeds certain threshold limits associated with the secured party's exposure;

2) if the Company defaults on any of its indebtedness (including default where repayment of the indebtedness has not been accelerated by the lender), then the Company could also be declared in default on its derivative obligations;

3) if the Company fails to maintain its status as a well-capitalized institution then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

The table below identifies the balance sheet category and fair value of the Company's derivative instruments as of September 30, 2024 and December 31, 2023.

2) if the Company defaults on any of its indebtedness (including default where repayment of the indebtedness has not been accelerated by the lender), then the Company could also be declared

in default on its derivative obligations;

and 3) if the Company fails to maintain its status as a well-capitalized institution then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

The table below identifies the balance sheet category and fair value of the Company’s derivative instruments as of March 31, 2025 and December 31, 2024.

The Company has a minimum collateral posting threshold with its derivative counterparty.

If the Company had breached any provisions under the agreement at September 30, 2024, it could have been required to settle its obligations under the agreement at the termination value.

September 30, 2024 December 31, 2023

If the Company had breached any provisions under the agreement as of March 31, 2025, it could have been required to settle its obligations under the agreement at the termination value.

March 31, 2025 December 31, 2024

(dollars in thousands) Notional

3 unchanged sentences

Derivatives in an asset position:

Derivatives designated as hedging instruments:

Interest rate product $ — $ — Other assets $ 300,000 $ 374 Other assets

Derivatives not designated as hedging instruments:

1 unchanged sentence

Credit risk participation agreements 49,480 — Other Liabilities 49,480 — Other Liabilities

Total 804,636 31,985 700,909 30,291

Total derivatives in an asset position $ 799,562 $ 29,165 $ 746,566 $ 31,592

$ 804,636 $ 31,985 $ 1,000,909 $ 30,665

Derivatives in a liability position:

1 unchanged sentence

Interest rate product $ 750,082 $ 26,447 Other Liabilities $ 697,086 $ 29,110 Other Liabilities

The table below presents the effect of the Company's derivative financial instruments on the Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023:

The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations

Amount of Gain (Loss) Recognized in Income on Derivatives

Location of Gain (Loss) Recognized in Income on Derivatives Three Months Ended September 30, Nine Months Ended September 30,

(dollars in thousands) 2024 2023 2024 2023

Interest rate products Other income / (other expense) $ 843 $ 3,027 $ 1,321 $ 3,735

The following table provides information regarding the Bank’s deposit composition at September 30, 2024 and December 31, 2023:

(dollars in thousands) September 30, 2024 December 31, 2023

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024.

Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations

(dollars in thousands) Location of Gain or (Loss) Recognized in

Income on Derivative Amount of Gain or (Loss) Recognized in Income on Derivatives

Three Months Ended March 31,

Derivatives Not Designated as Hedging Instruments under ASC 815-20:

Interest rate products Other income / (expense) $ ( 6 ) $ 239

Note 7 – Deposits

The following table provides information regarding the Bank’s deposit composition as of March 31, 2025 and December 31, 2024:

(dollars in thousands) March 31, 2025 December 31, 2024

Noninterest-bearing demand $ 1,607,826 $ 1,544,403

3 unchanged sentences

Total $ 9,277,268 $ 9,131,078

The remaining maturity of time deposits at September 30, 2024 and December 31, 2023 were as follows:

(dollars in thousands) September 30, 2024 December 31, 2023

The remaining maturity of time deposits as of March 31, 2025 and December 31, 2024 were as follows:

(dollars in thousands) March 31, 2025 December 31, 2024

2025 $ 2,079,224 $ 2,210,348

3 unchanged sentences

2029 32,955 32,383

Thereafter 68,703 —

Total $ 3,183,801 $ 2,775,663

As of September 30, 2024 and December 31, 2023, time deposit accounts in excess of $250 thousand were as follows:

(dollars in thousands) September 30, 2024 December 31, 2023

As of March 31, 2025 and December 31, 2024, time deposit accounts in excess of $250 thousand were as follows:

(dollars in thousands) March 31, 2025 December 31, 2024

Three months or less $ 388,868 $ 189,817

More than three months through six months

526,434 387,849

More than six months through twelve months 448,148 710,021

1 unchanged sentence

Total $ 1,916,970 $ 1,709,217

At September 30, 2024, total brokered deposits were $ 3.6 billion or 42.5 % of total deposits, of which $ 1.4 billion were attributable to the Certificates of Deposit Account Registry Service ("CDARS") and Insured Cash Sweep ("ICS") two-way accounts.

At December 31, 2023, total brokered deposits (excluding the CDARS and ICS two-way) were $ 2.5 billion, or 28.8 % of total deposits.

The following table summarizes the Company’s borrowings, which include repurchase agreements with the Company’s customers and borrowings, at September 30, 2024 and December 31, 2023:

As of March 31, 2025, total brokered deposits were $ 3.8 billion, or 41 % of total deposits, compared to $ 4.0 billion, or 44 % as of December 31, 2024.

Note 8 – Borrowings

The following table summarizes the Company’s borrowings, which include repurchase agreements with the Company’s customers and borrowings as of March 31, 2025 and December 31, 2024:

(dollars in thousands) Borrowings - Principal Unamortized Deferred Issuance Costs Net Borrowings Outstanding Available Capacity (1)

Maturity Dates Interest Rates (2)

September 30, 2024:

March 31, 2025

Customer repurchase agreements $ 32,357 $ — $ 32,357 $ — N/A 2.87 %

1 unchanged sentence

Secured borrowings:

FHLB 240,000 — 240,000 1,203,126 April 1, 2025 5.20 %

BTFP 1,000,000 — 1,000,000 — January 15, 2025 4.76 %

FHLB 490,000 — 490,000 1,070,435 Various (3)

Discount window — — — 1,806,205 N/A N/A

Raymond James repurchase agreement — — — 18,604 N/A N/A

Subordinated notes — — — — N/A N/A

Total 490,000 — 490,000 2,876,640

6 unchanged sentences

Secured borrowings:

FHLB — — — 1,271,846 N/A N/A

BTFP 1,300,000 — 1,300,000 598,870 March 22, 2024 4.53 %

FHLB 490,000 — 490,000 874,270 Various 4.81 %

Discount window — — — 1,800,646 N/A N/A

Raymond James repurchase agreement — — — — N/A N/A

Subordinated notes 70,000 ( 82 ) 69,918 — September 1, 2024 5.75 %

Total 490,000 — 490,000 2,674,916

Long-term borrowings:

77,665 ( 1,557 ) 76,108 — September 30, 2029 10.00 %

Total borrowings $ 600,822 $ ( 1,557 ) $ 599,265 $ 2,674,916

(1) Available capacity on the Company's borrowing arrangements with the FHLB, the FRB and the Raymond James repurchase line comprise pledged collateral that has not been borrowed against.

At September 30, 2024, the Company had total additional undrawn borrowing capacity of approximately $ 4.0 billion, comprising unencumbered securities available to be pledged of approximately $ 892.9 million and undrawn financing on pledged assets of $ 3.1 billion.

(2) Represent the weighted average interest rate on customer repurchase agreements and the borrowings outstanding and the coupon interest rate on the subordinated notes, which approximates the effective interest rate.

(1) Available capacity on the Company's borrowings arrangements with the FHLB, the FRB and the Raymond James repurchase line comprise pledged collateral that has not been borrowed against.

As of March 31, 2025, the Company had total additional undrawn borrowing capacity of approximately $ 4.2 billion, comprising unencumbered securities available to be pledged of approximately $ 1.3 billion and undrawn financing on pledged assets of $ 2.9 billion.

(2) Represent the weighted average interest rate on customer repurchase agreements, borrowings outstanding and the coupon interest rate on the subordinated notes, which approximates the effective interest rate.

(3) FHLB borrowings of $ 240.0 million were paid off on April 1, 2025 and a balance of $ 250.0 million remains outstanding as of the filing of this report.

The Company’s repurchase agreements operate on a rolling basis and do not contain contractual maturity dates.

1 unchanged sentence

There are no prepayment penalties nor unused commitment fees on any of the Company’s borrowing arrangements.

Bank Term Funding Program ("BTFP")

On March 12, 2023, the FRB, Department of Treasury and the Federal Deposit Insurance Corporation ("FDIC") issued a joint statement outlining actions they had taken to protect the U.S.

economy by strengthening public confidence in the banking system as a result of and in response to recently announced bank closures.

Among other actions, the Federal Reserve Board announced that it would make available additional funding to eligible depository institutions through the creation of a new BTFP.

The BTFP provides eligible depository institutions, including the Company's subsidiary bank, the Bank, an additional source of liquidity.

Borrowings are funded based on a percentage of the principal of eligible collateral posted, as defined within the terms of the program.

Interest is payable at a fixed rate over the term of the borrowing and there are no prepayment penalties.

The Federal Reserve announced in January 2024 that the BTFP would stop originating new loans on March 11, 2024, as scheduled.

The Federal Reserve also modified the terms of the program so that the interest rate for new loans would be no lower than the interest rate on reserve balances in effect on the day the loan is made.

In January 2024, the Company borrowed an additional $ 500.0 million through the BTFP and refinanced $ 500.0 million under the program, both at an interest rate of 4.76 % that mature in January 2025.

On September 30, 2024, the Company closed a private placement of its 10.00 % senior unsecured debt totaling $ 77.7 million maturing on September 30, 2029 (the "2029 Senior Notes").

At September 30, 2024, the carrying value of these 2029 Senior Notes was $ 75.8 million.

which reflected $ 1.9 million in deferred financing costs that are being amortized over the life of the 2029 Senior Notes.

On September 30, 2024, the Company closed a private placement of its 10.00 % senior unsecured debt totaling $ 77.7 million maturing on September 30, 2029 (the "2029 Senior Notes" or "Original Notes").

As of March 31, 2025, the carrying value of these 2029 Senior Notes was $ 76.2 million which reflected $ 1.5 million in unamortized deferred financing costs that are being amortized over the life of the 2029 Senior Notes.

In connection with the issuance of the 2029 Senior Notes, the Company also entered into a registration rights agreement dated September 30, 2024 with the purchasers of the 2029 Senior Notes (the “Registration Rights Agreement”).

Pursuant to the Registration Rights Agreement, the Company is planning to file an exchange offer registration statement with the SEC to exchange the Senior Notes for substantially identical notes registered under the Securities Act.

Subordinated Notes

On August 5, 2014, the Company completed the sale of $ 70.0 million of its 5.75 % subordinated notes, which matured and were repaid in September 2024 (the "2024 Notes").

The net proceeds were approximately $ 68.8 million which included $ 1.2 million in deferred financing costs, which were amortized over the life of the 2024 Notes.

The 2024 Notes were offered to the public at par and qualified as Tier 2 capital for regulatory purposes to the fullest extent permitted under the Basel III Rule capital requirements and were fully phased out of regulatory capital as of December 31, 2023 as they approached maturity.

Net Income (Loss) per Common Share

The calculation of net income (loss) per common share for the three and nine months ended September 30, 2024 and 2023 was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

Pursuant to the Registration Rights Agreement, the Company filed an exchange offer registration statement with the SEC to exchange the Senior Notes for substantially identical notes registered under the Securities Act (the "Exchange Notes").

The terms of the Exchange Notes are identical to the terms of the Original Notes, except that the transfer restrictions and registration rights applicable to the Original Notes do not apply to the Exchange Notes.

The Company completed the exchange offer on January 16, 2025.

Note 9 – Net Income (Loss) per Common Share

The calculation of net income (loss) per common share for the three months ended March 31, 2025 and 2024 was as follows:

Three Months Ended March 31,

(dollars and shares in thousands, except per share data) 2025 2024

15 unchanged sentences

To calculate diluted net income (loss) per share, the Company utilizes the Treasury Stock method which results in only an incremental number of shares added to shares outstanding during the period.

Other Comprehensive (Loss) Income

The following table presents the components of other comprehensive (loss) income for the three and nine months ended September 30, 2024 and 2023.

Note 10 – Other Comprehensive Income (Loss)

The following table presents the components of other comprehensive income (loss) for the three months ended March 31, 2025 and 2024.

(dollars in thousands) Before Tax Tax Effect Net of Tax

Three Months Ended September 30, 2024

Net unrealized gain on securities available-for-sale $ 46,788 $ ( 11,450 ) $ 35,338

Reclassification adjustment for net gain included in net income ( 3 ) 1 ( 2 )

Total unrealized gain on investment securities available-for-sale

Three Months Ended March 31, 2025

Net unrealized gain (loss) on securities available-for-sale $ 25,673 $ ( 6,322 ) $ 19,351

Reclassification adjustment for net loss included in net income (loss)

( 4 ) 1 ( 3 )

Total unrealized gain (loss) on securities available-for-sale

25,669 ( 6,321 ) 19,348

Amortization of unrealized loss on securities transferred to held-to-maturity 1,565 ( 361 ) 1,204

Net unrealized loss on derivatives ( 24 ) 6 ( 18 )

Other comprehensive income $ 48,521 $ ( 11,855 ) $ 36,666

Three Months Ended September 30, 2023

Net unrealized loss on securities available-for-sale $ ( 28,150 ) $ 6,836 $ ( 21,314 )

Reclassification adjustment for net gain included in net income ( 5 ) 1 ( 4 )

Total unrealized loss on investment securities available-for-sale ( 28,155 ) 6,837 ( 21,318 )

Amortization of unrealized loss on securities transferred to held-to-maturity 1,824 ( 424 ) 1,400

Other comprehensive loss

Other comprehensive income (loss) $ 27,210 $ ( 6,676 ) $ 20,534

Three Months Ended March 31, 2024

Net unrealized gain (loss) on securities available-for-sale

$ ( 6,693 ) $ 1,626 $ ( 5,067 )

Nine Months Ended September 30, 2024

Net unrealized gain on securities available-for-sale

Reclassification adjustment for net loss included in net income (loss)

( 4 ) 1 ( 3 )

Reclassification adjustment for net gain included in net income ( 10 ) 2 ( 8 )

Total unrealized gain on investment securities available-for-sale

Total unrealized gain (loss) on securities available-for-sale

( 6,697 ) 1,627 ( 5,070 )

Amortization of unrealized loss on securities transferred to held-to-maturity 1,731 ( 346 ) 1,385

Net unrealized gain on derivatives 298 ( 73 ) 225

Other comprehensive income $ 50,419 $ ( 12,239 ) $ 38,180

Nine Months Ended September 30, 2023

Net unrealized loss on securities available-for-sale

Net unrealized loss on derivatives

363 ( 89 ) 274

Reclassification adjustment for net loss included in net income 14 ( 4 ) 10

Total unrealized loss on investment securities available-for-sale

Other comprehensive income (loss)

$ ( 4,603 ) $ 1,192 $ ( 3,411 )

Amortization of unrealized loss on securities transferred to held-to-maturity 5,638 ( 2,194 ) 3,444

Other comprehensive loss $ ( 14,418 ) $ 2,420 $ ( 11,998 )

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax, for the three and nine months ended September 30, 2024 and 2023.

(dollars in thousands) Securities Available-For-Sale Securities Held-to-Maturity Derivatives Accumulated Other Comprehensive Income (Loss)

Three Months Ended September 30, 2024

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2025 and 2024.

(dollars in thousands) Securities Available

For Sale Held-to-Maturity Securities Derivatives Accumulated Other

comprehensive income (loss)

Three Months Ended March 31, 2025

Balance at beginning of period

$ ( 106,852 ) $ ( 34,639 ) $ 18 $ ( 141,473 )

Other comprehensive income (loss) before reclassifications 19,351 — ( 18 ) 19,333

Amounts reclassified from accumulated other comprehensive income (loss) ( 2 ) — — ( 2 )

Amortization of unrealized loss on securities transferred to held-to-maturity — 1,204 — 1,204

Amounts reclassified from accumulated other comprehensive loss ( 3 ) — — ( 3 )

Net other comprehensive income (loss) during period 19,348 1,204 ( 18 ) 20,534

Balance at end of period

Three Months Ended September 30, 2023

Balance at beginning of period $ ( 148,897 ) $ ( 42,690 ) $ — $ ( 191,587 )

Other comprehensive loss before reclassifications ( 21,314 ) — — ( 21,314 )

Amounts reclassified from accumulated other comprehensive income (loss) ( 4 ) — — ( 4 )

Amortization of unrealized loss on securities transferred to held-to-maturity — 1,400 — 1,400

Net other comprehensive (loss) income during period ( 21,318 ) 1,400 — ( 19,918 )

Balance at end of period $ ( 170,215 ) $ ( 41,290 ) $ — $ ( 211,505 )

Nine Months Ended September 30, 2024

$ ( 87,504 ) $ ( 33,435 ) $ — $ ( 120,939 )

Three Months Ended March 31, 2024

Balance at beginning of period

Other comprehensive (loss) income before reclassifications 33,901 — 225 34,126

Amounts reclassified from accumulated other comprehensive income (loss) ( 8 ) — — ( 8 )

$ ( 122,246 ) $ ( 39,929 ) $ ( 182 ) $ ( 162,357 )

Other comprehensive income (loss) before reclassifications

( 5,067 ) — 274 ( 4,793 )

Amortization of unrealized loss on securities transferred to held-to-maturity — 1,385 — 1,385

Amounts reclassified from accumulated other comprehensive loss ( 3 ) — — ( 3 )

Net other comprehensive income (loss) during period

Balance at end of period $ ( 88,353 ) $ ( 35,867 ) $ 43 $ ( 124,177 )

Nine Months Ended September 30, 2023

Balance at beginning of period $ ( 154,773 ) $ ( 44,734 ) $ — $ ( 199,507 )

Other comprehensive income before reclassifications ( 15,452 ) — — ( 15,452 )

Amounts reclassified from accumulated other comprehensive income 10 — — 10

Amortization of unrealized loss on securities transferred to held-to-maturity — 3,444 — 3,444

Net other comprehensive (loss) income during period ( 15,442 ) 3,444 — ( 11,998 )

( 5,070 ) 1,385 274 ( 3,411 )

Balance at end of period

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023.

Details about Accumulated Other Comprehensive Income (Loss) Components Amount Reclassified from Accumulated Other Comprehensive Income (Loss)

Three Months Ended September 30, Affected Line Item in Consolidated Statements of Income

(dollars in thousands) 2024 2023

Realized gain (loss) on sale of investment securities $ 3 $ 5 Net gain (loss) on sale of investment securities

Income tax benefit (expense) ( 1 ) ( 1 ) Income tax expense

Total reclassifications for the periods $ 2 $ 4

Details about Accumulated Other Comprehensive Income (Loss) Components Amount Reclassified from Accumulated Other Comprehensive Income (Loss)

Nine Months Ended September 30, Affected Line Item in Consolidated Statements of Operations

$ ( 127,316 ) $ ( 38,544 ) $ 92 $ ( 165,768 )

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three months ended March 31, 2025 and 2024.

Amount Reclassified from

Accumulated Other

Comprehensive Income (Loss) Affected Line Item in

the Statement Where

Net Income (Loss) is Presented

Three Months Ended March 31,

(dollars in thousands) 2025 2024

1 unchanged sentence

Income tax benefit (expense) ( 1 ) ( 1 ) Income tax expense

Total reclassifications for the periods $ 8 $ ( 10 )

Fair Value Measurements

Total $ 3 $ 3 Net Income (Loss)

Note 11 – Fair Value Measurements

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability.

2 unchanged sentences

Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability.

ASC Topic 820, "Fair Value Measurements and Disclosures," establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

ASC 820, “Fair Value Measurements and Disclosures,” establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The fair value hierarchy is as follows:

Level 1 Quoted prices in active exchange markets for identical assets or liabilities.

also includes certain U.S.

treasury and other U.S.

Government and agency securities actively traded in over-the-counter markets.

Level 2 Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets or other observable inputs that can be corroborated by observable market data;

1 unchanged sentence

This category generally includes certain U.S.

Government and agency securities, corporate debt securities, derivative instruments, and residential mortgage loans held for sale.

Government and agency securities, corporate debt securities, and derivative instruments.

Level 3 Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation;

2 unchanged sentences

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023.

(dollars in thousands) Quoted Prices

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Other Unobservable Inputs

(Level 3) Total Fair Value

September 30, 2024

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024:

(dollars in thousands) Quoted Prices (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Other Unobservable Inputs (Level 3)

Total (Fair Value)

March 31, 2025

Investment securities available-for-sale:

U.S treasury bonds $ — $ 49,403 $ — $ 49,403

agency securities — 537,909 — 537,909

1 unchanged sentence

Commercial mortgage-backed securities

— 49,206 — 49,206

Municipal bonds — 7,888 — 7,888

Corporate bonds — 1,840 — 1,840

Loans held for sale — 15,251 — 15,251

Interest rate product — 29,165 — 29,165

Credit risk participation agreements — 1 — 1

Total assets measured at fair value on a recurring basis $ — $ 1,464,991 $ — $ 1,464,991

Total assets measured at fair value on a recurring basis as of March 31, 2025 $ — $ 1,258,653 $ — $ 1,258,653

Interest rate product $ — $ 26,447 $ — $ 26,447

Total liabilities measured at fair value on a recurring basis $ — $ 30,588 $ — $ 30,588

Total liabilities measured at fair value on a recurring basis as of March 31, 2025 $ — $ 26,447 $ — $ 26,447

December 31, 2024

4 unchanged sentences

Commercial mortgage-backed securities

— 48,945 — 48,945

Municipal bonds — 8,014 — 8,014

1 unchanged sentence

Interest rate product — 31,592 — 31,592

Credit risk participation agreements — 3 — 3

Total assets measured at fair value on a recurring basis $ — $ 1,537,053 $ — $ 1,537,053

Total assets measured at fair value on a recurring basis as of December 31, 2024 $ — $ 1,298,996 $ — $ 1,298,996

Interest rate product $ — $ 29,110 $ — $ 29,110

Total liabilities measured at fair value on a recurring basis $ — $ 30,555 $ — $ 30,555

Total liabilities measured at fair value on a recurring basis as of December 31, 2024 $ — $ 29,110 $ — $ 29,110

Investment securities available-for-sale:

2 unchanged sentences

If quoted prices are not available, fair value is measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.

Level 2 securities include certain U.S.

Level 2 securities includes certain U.S.

treasury bonds, U.S.

8 unchanged sentences

The Company entered into an interest rate derivative agreement with an institutional counterparty, under which the Company will receive cash if and when market rates exceed the derivatives' strike rate.

The fair value of the derivative is calculated by determining the total expected asset or liability exposure of the derivative.

The fair value of the derivative is calculated by determining the total expected asset or liability exposure of the derivatives.

Total expected exposure incorporates both the current and potential future exposure of the derivative, derived from using observable inputs, such as yield curves and volatilities.

4 unchanged sentences

Those individually assessed loans not requiring a specific allowance represent loans for which the fair value of expected repayments or collateral exceed the recorded investment in such loans.

At September 30, 2024, substantially all of the Company's individually evaluated loans were evaluated based upon the fair value of the collateral.

As of March 31, 2025, substantially all of the Company’s individually evaluated loans were evaluated based upon the fair value of the collateral.

In accordance with ASC Topic 820, individually evaluated loans where an allowance is established based on the fair value of collateral, i.e.

6 unchanged sentences

Assets measured at fair value on a nonrecurring basis are included in the table below.

There were no liabilities measured at fair value on a non-recurring basis as of March 31, 2025 and December 31, 2024.

(dollars in thousands) Quoted Prices

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Other Unobservable Inputs

(Level 3) Total Fair Value

September 30, 2024

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant Other

Unobservable Inputs

(Level 3) Total

March 31, 2025

Individually assessed loans:

2 unchanged sentences

Owner occupied - commercial real estate — — 27,721 27,721

Home equity — — 257 257

Construction - commercial and residential — — 298 298

Other real estate owned — — 2,459 2,459

Total assets measured at fair value on a nonrecurring basis as of September 30, 2024 $ — $ — $ 132,246 $ 132,246

Total assets measured at fair value on a nonrecurring basis as of March 31, 2025 $ — $ — $ 186,558 $ 186,558

(dollars in thousands) Quoted Prices

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant Other

Unobservable Inputs

(Level 3) Total

December 31, 2024

3 unchanged sentences

Owner occupied - commercial real estate — — 30,384 30,384

Real estate mortgage - residential — — 1,638 1,638

Consumer — — 396 396

Home equity — — 242 242

Construction - commercial and residential — — 303 303

Other real estate owned — — 2,743 2,743

15 unchanged sentences

In addition, the estimates are only indicative of individual financial instrument values, including in certain cases, the Company's estimation of exit pricing, and should not be considered an indication of the fair value of the Company taken as a whole.

The estimated fair value of the Company's financial instruments at September 30, 2024 and December 31, 2023 are as follows:

The estimated fair values of the Company’s financial instruments as of March 31, 2025 and December 31, 2024 are as follows:

Fair Value Measurements

(dollars in thousands) Carrying Value Fair Value Quoted Prices

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Other Unobservable Inputs

September 30, 2024

(dollars in thousands) Carrying

Value Fair Value Quoted Prices

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant Other Unobservable

Inputs (Level 3)

March 31, 2025

Cash and due from banks $ 12,516 $ 12,516 $ 12,516 $ — $ —

4 unchanged sentences

Federal Reserve and Federal Home Loan Bank stock 51,467 N/A — — —

Loans 7,970,269 7,649,112 — 7,649,112

Loans held for sale

15,251 15,251 — 15,251 —

Loans held for investment

7,943,306 7,713,251 — — 7,713,251

Bank owned life insurance 320,055 320,055 — 320,055 —

7 unchanged sentences

Other short-term borrowings

490,000 490,000 — 490,000 —

Long-term borrowings 76,181 83,935 — 83,935 —

8 unchanged sentences

Federal Reserve and Federal Home Loan Bank stock 51,763 N/A — — —

Loans 7,968,695 7,720,241 — — 7,720,241

Loans held for investment

7,934,888 7,707,424 — — 7,707,424

Bank owned life insurance 115,806 115,806 — 115,806 —

Annuity investment 12,656 12,656 — 12,656 —

Credit risk participation agreements 3 3 — 3 —

Interest rate product 31,592 31,592 — 31,592 —

5 unchanged sentences

Other short-term borrowings

490,000 490,000 — 490,000 —

Long-term borrowings 76,108 82,916 — 82,916 —

1 unchanged sentence

Accrued interest payable 17,844 17,844 — 17,844 —

Legal Contingencies

Note 12 – Segment Reporting

The Company has one reporting unit, one operating segment and, consequently, a single reportable segment.

The Chief Executive Officer, who is the Company’s chief operating decision maker ("CODM"), monitors revenue streams and other information provided about the company’s products and services offered, primarily banking operations.

The information provided to the CODM is presented on an aggregated entity-level basis, which is consistent with the accompanying Consolidated Financial Statements presented in this Form 10-Q.

The CODM evaluates the financial performance of the Company’s business by evaluating revenue streams, significant expenses, and budget to actual results in assessing operating results and in allocating resources, but profitability is only determined at the entity level.

The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets.

The CODM uses consolidated net income to benchmark the company against its competitors.

The benchmarking analysis coupled with monitoring of budget to actual results are used in assessing performance and allocating resources.

Interest income and fees on loans, investments, and deposits provide the majority of revenues in the Company's operation.

Interest expense, provisions for credit losses, and payroll provide the significant expenses in the Company's operations.

All of the Company's income and expenses are included in the accompanying Consolidated Financial Statements presented in this Form 10-Q.

All of the Company’s operations are domestic.

Note 13 - Legal Contingencies

From time to time, the Company and its subsidiaries are involved in various legal proceedings incidental to their business in the ordinary course, including matters in which damages in various amounts are claimed, as well as regulatory and governmental investigations and inquiries that could result in penalties, fines or other sanctions against the Company.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements